WaPo: Fed May Scrap 'Measured' Pace For Rate Increases

[salin]

Fed May Scrap 'Measured' Pace For Rate Increases

By Nell Henderson
Washington Post Staff Writer
Friday, June 11, 2004; 8:41 AM


A Federal Reserve bank president today all but declared that the central bank will raise a key interest short-term rate later this month, and he warned that the pace of rate increases to follow may come more quickly than he and his colleagues recently envisioned.

"Given the economic growth and rising prices now unfolding, the general direction of our next policy move should be clear -- barring any unexpected events," said Federal Reserve Bank of Atlanta president Jack Guynn, according to the text of a speech scheduled to be delivered this morning. Guynn noted the recent flare-up in inflation, but he said it is still at a low level that he believes is "acceptable." However he warned that he, for one, is prepared to scrap the idea of raising rates at a "measured" pace if inflation keeps rising.

---snip

Analysts and investors generally expect the Fed to raise the rate to 1.25 percent from 1 percent at the next meeting, but they differ widely in predictions of how rapidly and how far the central bank will continue to raise rates thereafter.

Many economists have interpreted a "measured" pace to mean quarter-point increases spread over many months or even a few years, gradually raising the Fed funds rate -- the rate charged between banks for overnight loans -- to a level that neither stimulates nor puts the brakes on economic growth. Abandoning a "measured" pace would mean raising rates more quickly or in larger steps.

more: http://www.washingtonpost.com/wp-dyn/articles/A33901-2004Jun11.html

[Kagemusha]

1. The Bank of England just raised rates 2 times in 1 month...

So I was reading discussions about that bank abandoning this measured process in The Guardian just, oh, yesterday.

I'm wondering what the hell is going on here. Now that the PPI numbers are delayed, and there's no trading today...

[jmcgowanjm]

2. Do it and watch the Housing market, Fannie, Freddie crumble

along w/ the heavily indebted middle class (or what's left of it).

[Joanne98]

4. That was the plan all along

Republicans hate the middle class. They started trying to destroy under Reagan. Now under President Torture they're driving the stake in it's heart.

[jmcgowanjm]

7. Hello Joanne98, nice summary

I do remember the day Reagan was elected.
The same election saw my Guv, Bill Clinton
defeated by Frank White (Mr. Banana, for
his Creation-in-your-face views).

And I knew Reagan would raise % rates,
just didn't think he'd go up to
15%!

Started a decade long Depression for me.
But made me realize these guys will do anything
to hold the reins of power.

[Joanne98]

15. Thanks

The RW hatred of the middle class is so obvious it's baffling why they can't see it.

[MallRat]

3. Oh, f*ck me.

I might need a home equity loan 6-12 months from now... this is going to SUCK.

Do you think the Fed got a preview of the May PPI number? It must've scared the piss out of them. Greater than 2%?

-MR

[jmcgowanjm]

5. Hold on and your home can be bought for .50 on the $1

People will be leaving keys in the door and
walking away.

And the last thing banks want is a house to
sell.

[ozone_man]

10. Really.

Now is not a good time to get into real estate, unless you have to. Wait a couple of years. Of course it is the more expensive real estate that will get hit the hardest.

[hatrack]

8. Didn't you hear? No PPI for you! Defective integers prevented updates!

Unbelievable. They said that their calculations just weren't working out, preventing release of the data. Whores.

[MallRat]

11. Defective integers? WTF?

Holy shit. The May figure is a whole number, isn't it?

+2%? Could it be +3%?!?!

=MR

[hatrack]

12. Tongue firmly (in) cheek - but here's a link

Honestly, they said that they can't get their calculations to work for last month's data, but that all the preceding months' PPI figures are accurate. Yeah, uh-huh, right, OK . . .

[jmcgowanjm]

13. Thanx for the link, hatrack n/t

[Jackpine Radical]

6. I have a large (for me) 29-mo. CD about to roll over.

I'm gonna pull it & stick it in a money mkt account until at least after the election, more probably after the 1st of the year. I'm pretty well dead certain int. rates aren't coming down anytime soon, especially if a Dem gets in in Nov. because then Greenspan will be free to start playing economist again instead of trying to manipulate the economy to make Bush look good in the short term (i.e. hold down rates based on bogus inflation estimates).

[jmcgowanjm]

9. Check out ING Orange Acct online

No overhead, Higher % on MMfunds

[Jackpine Radical]

17. Not a bad tip. 2.1% APY---

However, my local bank has 1.8% & for the few bux diff, it's easier for me to keep it local, especially since this presumably won't be a long-term deposit. Actually, the best deal I have going is a 5% tax-deferred account through my work. I've been spending some conventional savings & sticking more of my salary in that every month.

[Joanne98]

16. Greenspan should be fired

It's not his job to make Bush look good.

[On the Road]

20. I Guarantee This Won't Make Bush Look Good

Interest rates shooting up just before the election. It will cool off inflation eventually, but that's a longer-term process.

Anyone who reads the business news now knows this is a serious enough problem to force Greenspan's hand in an election year. He's covered for Bush up to now, but he obviously doesn't feel he can wait any longer.

[happynewyear]

19. look for 90-day penalty CDs

Thats where I put mine awhile ago. If you need to crack into them, it is a 90-day forfeiture of interest only. NetBank is one of them btw.

I heard the PPI was really high - like .6% perhaps and they are rushing to juggle those #'s around before they release the real #'s!

[Teaser]

14. That PPI number must be worse than we thought...

My first thought.

[Media_Lies_Daily]

18. Ruh-roh! Hold onto your hats!