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To: Jeffrey L. Henken who wrote (180)	9/16/1998 5:48:00 AM
From: Ray Tarke	Read Replies (1) \| Respond to of 939

A nice article. Greenspan will do is usual act and keep us guessing tomorrow. I think Greenspan will cut on Sept.29 but a conservative 1/4 point. Regards, R.T

To: Jeffrey L. Henken who wrote (180)	9/16/1998 1:25:00 PM
From: Les H	Read Replies (2) \| Respond to of 939

I don't think they'll cut interest rates before the election. Fed To Cut Rates Modestly In 1999 - Forecast LOS ANGELES (Reuters) - The Federal Reserve will cut interest rates slightly in 1999 in order to spur demand and keep the nation"s economy healthy, according to a forecast report released Wednesday. The quarterly report, issued by economists at the Anderson School at the University of California, Los Angeles, said U.S. gross domestic product (GDP) growth will slow to 1.9 percent in 1999 from an expected 3.5 percent in 1998. The report said U.S. inflation would jump to 2.4 percent in 1999 and 2000 from a benign 1.6 percent in the current year. Unemployment was expected to rise to 5.2 percent in 1999 and 5.4 percent in 2000 from 4.6 percent in 1998. The authors of the report, Larry Kimbell and Rajeev Dhawan, said this slowdown will lead the Fed to cut short-term rates by three-quarters of a point 1999 to boost demand. ''This is nowhere near a recession forecast, but rather that of a pronounced slowdown that puts us back on our long-term path,"" the authors said. ''We are not going to have a recession and we don"t have a boom. We are going to continue to enjoy an expansion with low inflation and lower interest rates, with a strong domestic economy and weak international trade,"" they said. The forecast marked a reversal from their last report, issued in June, which predicted the Fed would begin raising rates in late 1998 and 1999 to help slow the economy from what was then considered an ''unsustainable"" growth rate. The authors said their revised forecast was prompted by the dramatic drop in the stock market, which they blamed primarily on over-inflated stock prices and not on fears of turmoil in Asia and Russia and the risk of it spreading to Latin America. ''It is largely implausible to suggest that U.S. investors suddenly got nervous this summer over any... foreign problems -- as there is absolutely nothing dramatically new about any of these situations,"" the authors said. ''In short, the U.S. stock market is down because it never deserved to be so high."" The report had a rosier long-term forecast for U.S. GDP, saying it would grow at an annual rate of 2.4 percent during the first decade of the 21st century. Low inflation was also predicted for the next 25 years, although the report warned about the danger of a sudden rise in energy prices. ''The only scary factor in this good picture could be the possible resurgence of oil price shocks as seen in the "70s which can disrupt this harmony,"" the report said. ''However, the chances of oil prices rising at double-digit rates suddenly in a year are rather slim.""