Word: baumohl
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...expanding at a pace that has Fed chairman Greenspan nervous. "The dominant view had been to expect a further one-quarter percent rate hike in June, but if the economy continues to show strength that may well turn into a half-point increase," says TIME Senior Business Writer Bernard Baumohl. "Even in increments, the rate increases eventually dim the outlook for profits, and that has an impact on the market. The Fed has been stepping more and more firmly on the brake to slow the economy, but investors are clearly uncertain as to whether the brakes have yet taken hold...
...silver lining for investors in Greenspan's desire to get the job done quickly. "The need to ensure a smooth landing rather than bring the economy crashing to a halt means that the Fed will want to make any increase in June their last for the year," says Baumohl. "It wouldn?t be at all surprising if, once it absorbed that increase, the market shows a healthy rebound...
...latest attempt to hamstring the swaggering U.S. economy just enough to keep inflation at bay. Businesses, especially capital-intensive ones like the dot-coms, have no love of more expensive money. But Father Greenback has sold the markets on his firm hand, says TIME senior economics reporter Bernard Baumohl, and a full half-point hike was the only way for Greenspan to reward that confidence now. "The markets were worried for a moment that the Fed was behind the curve, but Greenspan realizes that in spite of all the tapping of brakes with the five quarter-point hikes, the economy...
Moved PermanentlyMoved PermanentlyFortune Investor DataNot that inflation is actually apparent; witness Tuesday's pre-opening announcement that consumer prices were unchanged in April. "The markets are taking it on faith," says Baumohl, that Greenspan is right about lurking price pressures, and a half-point hike is seen as welcome proof of his vigilance. "Fifty basis points means the Fed is in charge again and inflation is under control," he says. "The markets have already discounted it. They're happy about it. Anything less would have be met with disappointment." A half-percent increase also raises the hope that this hike...
...With reporting by Bernard Baumohl and Julie Rawe/New York and David S. Jackson/Los Angeles