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To: Crimson Ghost who wrote (5146)	1/3/1998 2:57:00 PM
From: Abner Hosmer	Read Replies (1) \| Respond to of 116753

George - I am very curious as to the rationale for the FOMC to cut interest rates. Greenspan has long been an inflation hawk and has repeated his view recently that inflation remains the Feds primary concern. I simply can't imagine him turning around and cutting interest rates in the face of the lowest unemployment rate in 25 years. Most likely, I think the Fed will do nothing and will wait to see whether the crisis in Asia will have the desired effect of cooling the US economy. I think the Fed may also anticipate strong capital flows into the US as a haven from currency turmoil in Asia and the onset of EMU in Europe. Also,I think that Greenspan is extremely sensitive to the tightness of labor markets in the US. In short, I think that the FOMC likely feels there is sufficient fuel in the economy without lowering rates and is probably more concerned that the current rate of expansion is unsustainable. Tom