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To: Steeny who wrote (20149)	6/4/1999 1:47:00 PM
From: RON BL	Respond to of 41369

Feds speak today: Fed's Kelley: Data May Signal Slowing WASHINGTON (Reuters) - The latest employment figures for May might suggest the U.S. economy is slowing from its robust pace but they are not conclusive, Federal Reserve governor Edward Kelley said Friday. ''Obviously, that employment report would be evidence in that respect,'' Kelley said when asked if the economy appeared to be slackening. Still, he emphasized that reports on other areas of the economy, such as the housing market and consumer confidence, indicated strength. In an interview with Reuters, Kelley offered a mixed assessment about the inflation risks. The tenor of his remarks suggested he was keeping an open mind about whether he and other Fed policymakers should raise interest rates at their next meeting on June 29-30. The Labor Department reported earlier that U.S. payrolls outside the farm sector grew by a weaker-than-expected 11,000 in May, although growth for prior months was revised upward. The unemployment rate fell to 4.2 percent, matching its 29-year low hit in March. ''We do definitely still have tight labor markets,'' Kelley said, but added that the economy appeared to be functioning well with the very low unemployment. Kelley said he saw no clear signs of an acceleration in wages and said that while some inflationary tendencies were showing up in the economy, overall production costs were ''quite favorable.'' Regarding the 0.7 percent jump in the U.S. Consumer Price Index in April, Kelley said, ''It certainly was an eye-opener for everyone but that is not enough to indicate a trend.''