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To: Glenn D. Rudolph who wrote (15383)	8/31/1998 2:03:00 PM
From: Jan Crawley	Respond to of 164684

Message 5632752

To: Glenn D. Rudolph who wrote (15383)	8/31/1998 8:16:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Alert: NAM calls on Fed to cut rates United Press International - August 31, 1998 13:30 %FINANCIAL %US %INTERESTRATES V%UPI P%UPI WASHINGTON, Aug. 31 (UPI) - The president of the National Association of Manufacturers urged the Federal Reserve Board to reduce U.S. interest rates to stimulate growth at home and counteract the effects of global economic turmoil. Jerry Jasinowski said ''Interest rates should be significantly reduced to help stabilize international exchange markets, help prevent the spread of worldwide recession and maintain growth in the United States. ''Interest rates are a dangerous drag on the economy in view of the fact that a third of the world economy is in recession. Asia is suffering due to a lack of foreign exchange and Russia's currency is plunging. Major South American nations are in a volatile economic state. These regions need liquidity before they can regain stability,'' Jasinowski said. The Federal Reserve's policy-making Open Market Committee last changed policy back on March 25, 1997 when it lowered the key Federal Funds rate one-quarter point to the current 5.25 percent. Lowering short-term interest rates often leads to decreases in long- term rates that businesses and consumers pay. When interest rates fall, businesses can expand and consumers have more money to spend. But it takes months or even years for the economy to feel these effects. ''The federal funds and discount rates should be lowered by 50 basis points as soon as possible, and no later than the next meeting of the Federal Open Market Committee,'' Jasinowski said. The Fed controls monetary policy by changing interest rates and the amount of money in circulation. In theory and by law, the central bank is supposed to keep the economy at full employment while maintaining price stability. The Fed funds rate, the rate banks charge each other for overnight loans, sets the trend for most other short-term rates and ultimately influences long-term rates such as mortgage interest rates and business loans. The discount rate is the rate the Fed charges for such overnight loans. ''Should this easing of rates not induce higher growth in the U.S. and troubled regions around the world in the near term, another rate reduction should be considered before the year's end. There should also be aggressive efforts to raise bank reserves and open market operations to increase liquidity prior to an FOMC meeting,'' Jasinowski added. The next FMOC meeting is scheduled for Sept. 29. -- Copyright 1998 by United Press International. All rights reserved. --