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Pastimes : FED TALK -- Ignore unavailable to you. Want to Upgrade?

To: Jeff Jordan who wrote (88)	7/15/2001 6:12:26 PM
From: Kelvin Taylor	Read Replies (1) \| Respond to of 94

Sunday July 15 2:09 PM ET Fed Official: No Strong Recovery Soon SAVANNAH, Ga. (Reuters) - Federal Reserve (news - web sites) Bank of Dallas President Robert McTeer said on Sunday he does not see much hope the U.S. economy will rebound strongly very soon and he left the door open for further interest rate cuts. McTeer told legislators from the southern state of Georgia the United States was not in a recession but was mired in a sharp growth slowdown. ``I don't see anything for a strong near-term recovery,'' McTeer said at the annual meeting of the Council of State Governments' Southern Legislative Conference in Savannah. It is still too soon to predict whether the Fed will cut rates for a seventh time this year at its next policy-setting meeting on August 21, McTeer said. Wall Street is expecting another quarter-point cut in the benchmark 3.75 federal funds rate on overnight bank lending at the August meeting. But with more than a month to go, sentiment could shift if the data shows evidence of a pick-up. ``It won't matter much if the rate goes down a quarter percent at our next meeting. But if there is not another quarter percent reduction, it will be because the Fed sees no need for it. That's better than the former,'' McTeer said. The Fed has slashed interest rates six times so far this year in a hurried bid to keep the giant U.S. economy from slipping into a recession. But there are few signs that growth is picking up from its sluggish pace over the past year. McTeer is considered one of the most dovish members of the Federal Open Market Committee (news - web sites) (FOMC), which sets U.S. interest rates, often arguing for monetary policy that tests the limits of non-inflationary growth. He said he does not see much ``upside'' from the sectors of the economy that have been the sources of strength during the slowdown, such as construction and services. McTeer briefly addressed the turmoil in emerging markets over the last week centered on concerns that Argentina might default on its debt payments. He said Argentina has been in a three-year recession and one source of its problems is its currency board's pegging the Argentine peso one-to-one to the dollar, which doesn't leave much room for maneuvering. ``It's difficult to see light at the end of the tunnel,'' he said of the Argentina's problems. He said Argentina's weakness could infect Brazil, but added the United States did not have substantial trade with either Latin American country. Washington does not appear to be currently considering any immediate bilateral aid or support for further funding through the International Monetary Fund (news - web sites) to shore up Argentina's finances.