To: JRI who wrote (89451 ) 1/15/1999 1:42:00 PM From: Chuzzlewit Respond to of 176387
For another view on Brazil: Friday January 15 12:49 PM ET Rivlin Says U.S. Worried About Brazil WASHINGTON (Reuters) - Federal Reserve Vicechair Alice Rivlin said on Friday the United States was watching developments in Brazil with great concern but indicated the Fed saw no need to react immediately by changing interest rates. In an interview with Reuters Television, she also said the U.S. stock market was "extremely strong" but noted that a market crash was not inevitable as prices could instead decline gradually amid expectations of an economic slowdown in the United States. "I think at the moment we're all waiting for events to shake out a bit, which is perhaps fortunate for the Federal Reserve because we don't have to do anything about monetary policy until early February," she said, referring to the Fed's next scheduled monetary policy meeting on Feb. 2 and 3. Rivlin said the Fed was "not at all sure" how events in Brazil, which on Friday floated its real currency amid mounting pressure on its ailing economy, would affect the still-robust U.S. economy. "The United States is watching with a good deal of concern. The hope that there will not be another round of deterioration in Latin America is very, very strong," she said. Rivlin added that while the continued resilience in the domestic economy had taken most forecasters by surprise, she still expected the U.S. economy to slow down "in the next few months". While she declined to specify whether the risk of a slowdown was outweighed that of overheating, she noted the Fed was "looking at risks on both sides". Rivlin said the ''extremely strong'' U.S. stock market had so far largely ignored expectations of a slowdown in the economy and in corporate earnings, but added that a market crash was not inevitable. "It's possible that the market, as earnings come down, will come down gradually," she said.