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To: goldsnow who wrote (12403)	5/30/1998 3:06:00 PM
From: Alex	Respond to of 116895

US money growth may prompt rate hike-Cleveland Fed NEW YORK, May 29 (Reuters) - The U.S. economy may need small increases in the 5.50-percent federal funds rate to slow down U.S. money growth and credit creation, according to the Federal Reserve Bank of Cleveland. Furthermore, modest increases in official U.S. rates would pose little threat to the current seven-year-old expansion, the Cleveland Fed said in a commentary appearing in the latest issue of ''Economic Trends,'' the bank's monthly publication. The paper was written by Cleveland Fed Director of Research Mark Sniderman, the publisher of ''Economic Trends,'' the bank's official monthly publication. ''Since the expansion has already withstood a 300-basis-point increase in the funds rate, the small rise anticipated by financial markets should not be as electrifying as some commentators would have it,'' the Cleveland Fed said. The Federal Reserve between February 1994 and February 1995 boosted the federal funds rate to 6.0 percent from 3.0 percent. The funds rate was subsequently lowered to 5.25 percent and raised only once in March 1997 to 5.50 percent, its level since. Despite the small rate hike, the economy grew by 3.8 percent in 1997, and at a 4.8-percent annual pace in the first quarter of this year, which implies domestic growth could easily tolerate the modest Fed rate hikes a number of market players now anticipate, the paper added. ''It would be unusual for small changes in the federal funds rate -- amounting to less than 100 basis points within a 12-month period -- to represent a significant change in the thrust of monetary policy. ''Indeed, small movements may occasionally be necessary to prevent the funds rate from drifting too far from market-determined rates and fostering undesirable money and conditions,'' the Cleveland Fed said. The previous issue of ''Economic Trends'' had carried an unsigned opinion piece urging the Fed to take a ''responsible decision'' to curb an inflationary pressures. Cleveland Fed President Jerry Jordan, voting Federal Open Market Committee (FOMC), dissented against keeping the funds rate unchanged at the March 30 meeting as he warned that excessive money and credit growth would result in higher inflation. The FOMC next meets on June 30-July 1. The Cleveland Fed paper also noted: -- ''The current economic expansion has just entered its eighth year and shows every sign of continuing.'' -- ''There are risks to consider... continuing problems in Japan... (or) an inventory correction.'' -- ''Labor shortages could lead to compensation increases large enough to reduce corporate corporate profits.'' -- ''Lending by financial institutions may overreach... causing a retrenchment in credit extensions that impairs economic activity.'' But the Cleveland Fed noted that, if none of those negative factors materialize, the Fed would have to act. ''Any number of possible events could reverse the economy's forward momentum. And then, there is the Federal Reserve.'' biz.yahoo.com

To: goldsnow who wrote (12403)	5/30/1998 3:51:00 PM
From: Bobby Yellin	Read Replies (1) \| Respond to of 116895

maybe the world will get lucky one of the days and be run some by truly great leaders..wonder what those odds are.. bobby (one of these days I had better start reading some modern history books..I assume that most revolutions come from hungry stomachs.. and religious beliefs next) (heard on tv that the Russians pride themselves on withstanding suffering..also heard they still have 10,000 nuclear warheads.. that is clout) (also heard difficult to get taxes from people who aren't paid their wages but are afraid to quit since they would lose all benefits they have earned if they ever come there way..) (wish the IMF would start doling out food and have UN be in charge and forget about the money..since it usually just goes to the leaders anyways I have been told..) (too bad the world can't eat information..or paper) bobby