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To: Alex who wrote (16601)	8/25/1998 11:31:00 PM
From: Eashoa' M'sheekha	Read Replies (2) \| Respond to of 116764

FED SOURCES: FOMC KEPT TIGHTENENING BIAS AT AUGUST MEETING By Steven K. Beckner ÿÿÿÿÿMarket News International - Federal Reserve policymakers seem to have retained a bias toward tightening at their Federal Open Market Committee meeting last Tuesday, according to indications from informed Fed sources. ÿÿÿÿÿDespite deteriorating foreign conditions and lower U.S. share prices, the consensus at the FOMC meeting was that the risks remained weighted toward accelerating inflation, not toward economic weakness and lower inflation, given the continued tightness of labor markets and the strength of domestic demand, the sources indicated. ÿÿÿÿÿOne FOMC participant used very comparable language to that contained in the minutes of the July 1 FOMC meeting, where the committee voted 10 to 1 in favor of an asymmetrical directive biased toward tightening. ÿÿÿÿÿ"The tails have gotten bigger on both sides," the official said. "With labor markets tight there are still risks of an acceleration of inflation. At the same time, the risks in the foreign sector have increased, so the distribution (of risks) has increased on both sides, but the risks are probably still tilted on the upside." ÿÿÿÿÿSimilarly, the July FOMC minutes, released last Thursday, stated: "Although recent developments had increased both the upside and the downside uncertainties in the economic outlook, most of the members felt that the risks continued to point on balance toward rising inflation," ÿÿÿÿÿ"Certainly one has got to think increases in risks have come more so from the foreign sector, but we still have domestic strength," said the official quoted above. "Despite slowing from the foreign sector, we still have quite a strong economy here." ÿÿÿÿÿThe same official described labor markets as "still tight -- very tight." And while there has been a lot of talk that lower share prices will cut into consumer spending, the official said, "it doesn't look like it right now." ÿÿÿÿÿTwo other officials had a nearly identical viewpoint. ÿÿÿÿÿ"I think there's probably a slightly greater risk that inflation is likely to move up than move down," said one. ÿÿÿÿÿIt's "up in the air" whether the economy will slow enough to ease labor market tightness and wage pressures, said the official, who added that "wages are rising at a faster pace than prices." Although there is now "little sense in which inflation appears to be in an uptrend," prices have been held down so far by a variety of special factors. ÿÿÿÿÿThe official went on to say that low oil and other commodity prices and low capital costs are providing a "significant offset" to the Asian drag on exports. ÿÿÿÿÿOfficials interviewed by Market News International expressed skepticism about the so-called "wealth effect" on consumption, at least until stocks fall much further and faster. And they pointed to the stimulative effects of falling commodity prices and longer term interest rates stemming from the Asian financial crisis. Most consumers, it was felt, base their spending decisions more on their job prospects and income growth than on the value of their stock portfolios. ÿÿÿÿÿOfficials said the second quarter slowdown was judged to be primarily the result of temporary factors like the now-resolved GM strike and the slowdown in inventory accumulation. Even the deterioration in net exports is unlikely to continue to worsen much longer, some said. ÿÿÿÿÿSo far, officials said, there is no firm indication domestic demand is slowing sustainably or that labor market strains are easing, and therefore inflation remains the greater risk, they said. ÿÿÿÿÿAs at previous FOMC meetings, a number of FOMC members argued again last week that financial conditions remain "accommodative" of demand. Though slower, money supply growth remained well above target, and plunging long rates are apt to spur interest-sensitive spending, officials contended. ÿÿÿÿÿAlso important to the FOMC discussion was the firm belief that the maintenance of relative price stability and dollar purchasing power has been the key to the "virtuous circle" of noninflationary expansion and low unemployment and that this was something the Fed had to err on the side of protecting in the current climate.

To: Alex who wrote (16601)	8/25/1998 11:44:00 PM
From: Eashoa' M'sheekha	Read Replies (1) \| Respond to of 116764

And The Golden Hits Just Keep A Comin................ FP Aug 25 1998 **************** ÿRoyal Bank of Canada (RY/TSE) fell $2.30 to $66.40, Bank of Montreal (BMO/TSE) tumbled $2 to $61.40 and Bank of Nova Scotia (BNS/TSE) dropped 90› to $29.20, as the C$ slid to a record low US64.5›. It closed at US64.55›. ÿThe financial services subindex fell 200.40 points, or 2.5%, to 7700.43, its lowest since Jan. 22, bringing its slide over the last four sessions to 10%. Canadian Imperial Bank of Commerce also lost 50› to $34.40 while Newcourt Credit Group Inc. (NCT/TSE) dropped $4.45 to $60.70. ÿToronto Dominion Bank (TD/TSE) lost 25› to $45.775. ÿGold producers fell amid concern the metal has failed to maintain its historical role as a safe investment.** ÿBarrick Gold Corp. (ABX/TSE) fell 30› to $25.40, Placer Dome Inc. (PDG/TSE) slipped 50› to $15.60 and Teck Corp. (TEKb/TSE) tumbled 45› to $12.05. Bullion fell US20› to US$285 an ounce on the Comex division of the New York Mercantile Exchange. Banks down----------BOC Answerable To Noone--------BOC--sells Gold---- Loonie goes for a Swan Dive----------------and the FP issues an exceptionally informed and unbiased( statement/opinion) regarding Gold ? Glad I'm not the editor.