US set for rates rise to head off inflation
Monday 28 June 1999
The Fed's Open Market Committee meets on Tuesday and Wednesday, and is expected to increase rates by a quarter of a point to head off any signs of resurgent US inflation.
Financial markets are primed and ready, and the decision - when it comes - may actually spark buying. The Fed has been signalling since last December that it was shifting away from further cuts, and it confirmed at its last meeting that it had shifted towards a bias in favour of an increase.
Alan Greenspan, the Fed Chairman, in testimony to Congress on 17 July, said that "When we can be pre-emptive we should be," a clear hint that a move was on the way.
It is possible that the Fed could raise rates by more than a quarter of a point this week, but it normally prefers to move in smaller steps. And there is little indication at the moment that it needs to move faster. The economy still shows few signs of inflation, if any.
The latest figures at the end of last week again painted a picture of a resilient economy that is neither slowing nor spinning off into a wage- price spiral. GDP growth for the fourth quarter was revised up from 4.1 per cent to 4.3 per cent, the difference explained by an improving export picture: some of the once-depressed markets abroad are starting to recover. Corporate profits were at their healthiest for four years. The GDP deflator, one measure of inflation, was rising at an annual rate of 1.6 per cent, slightly higher than originally estimated but still very low.
This would be the first rate rise since March 1997, but that increase - which followed two years of cuts, from 6 per cent in February 1995 - was a blip.
In effect, the Fed has been loosening policy for four years; before that, it had raised them for two-and-a-half years, from September 1992 to February 1995. Mr Greenspan has hinted that he wants to reverse the last three rate cuts from last year, which were a response to concerns about liquidity and international markets following the crisis in Asia, Latin America and Russia last year.
Regular cast member Ste Hay, played by Kieron Richardson, is about to test TV boundaries
- 1 Lee Evans announces retirement from comedy on The Jonathan Ross Show
- 2 Pirelli calendar 2015: The problem with 'plus-size' models like Candice Huffine
- 3 These grandmas smoking weed for the first time are wonderful
- 4 Woman opens professional cuddling shop – gets 10,000 customers in first week
Jeff Fletcher dead: Britpop guitarist is decapitated by lorry in horrific traffic accident
These grandmas smoking weed for the first time are wonderful
Jimmy Ruffin dead: Motown legend, who wrote 'What Becomes of the Brokenhearted', dies aged 78
New York snowstorm: Five dead and state of emergency declared as 'wall of snow' buries Buffalo
Woman opens professional cuddling shop – gets 10,000 customers in first week
G20 summit: Enter Putin. Accompanied by four warships. To the sound of mockery
'Muslims pre-date Columbus in discovering America,' says Turkish president Erdogan
David Cameron 'compares Vladimir Putin’s Russia to Nazi Germany' ahead of tense meeting
Former Tory PM Sir John Major says 'we would not have an NHS without migrants'
France 'blocks' Russian sailors from boarding a warship
G20 summit: David Cameron warns Vladimir Putin that Russia's relationship with the West is at a 'fork in the road' over Ukraine
iJobs Money & Business
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
$175 - $200 per annum, Benefits: full benefits: Carlton Senior Appointments: P...
Not specified: Carlton Senior Appointments: Senior MD Financial Advisor - San ...