Word: bias
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Dates: during 1990-1999
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Thank you, Mr. Greenspan ?- may we go now? Right on time at 2:20 p.m. Wednesday, the Federal Reserve released Wall Street from months of suspense. It raised short-term interest rates by one quarter point and returned its "bias" to neutral ?- and gave little sign of what it planned to do at its next meeting on August 24. TIME senior economics reporter Bernard Baumohl says that?s because Greenspan himself doesn?t know. "If the economy starts to slow down ?- and there are scattered indications that it?s beginning to ?- chances are he won?t raise again," he says...
Moved PermanentlyMoved PermanentlyFortune Investor DataAfter a jittery morning of anticipation, the markets heard "neutral bias" and bolted. The Dow went from 44 points down to 74 up in less than a minute. Bond yields momentarily dipped below 6 percent for the first time in weeks. An extended rally ?- given the strong correlation between consumers and the value of their portfolios ?- could of course set off the very overheat that Greenspan is so worried about. But the indexes are short-sighted, emotional creatures, and Wednesday the emotion was relief. "The uncertainty is over, and Greenspan clearly is done raising...
...their desks. Bye-bye rally. Of course, if investors and traders see all this coming and sell on the news, they may have to make room under that desk for Uncle Alan -? a harmless rate hike will have begotten a serious monetary neurosis. "The Fed won?t announce a bias like last time, because this is the hike it was warning us about," says Baumohl. "It?s shifting back into neutral." Of course, to a market that?s just aching to be unleashed, "neutral" is like raw meat to a roomful of Dobermans. Let?s just hope they...
...hasn't the Fed officially warned that it has a "bias" toward making money and credit tighter? Yes, allows the board, but the Fed may already have accomplished as much tightening as necessary--or maybe more--by subtle measures. True, it may kick up the "Fed funds" (very short-term) interest rate it controls by a modest quarter percentage point at its rate-setting meeting at the end of June--"just to prove it can do it, for practice," in Farrell's words. But such a move has been so widely expected, and discounted, that board members think...
Moved PermanentlyMoved PermanentlyFortune Investor DataPresumably, Greenspan will stop worrying too -? if he ever started. Many saw the Fed?s "bias shift" in May as a virtual rate hike, one that showed up in the market?s interest rates and took some steam out of stocks without the central bank?s actually having to do anything. Now, there are only two reasons for the Fed to raise rates at its June 29 meeting ?- to loosen up labor markets or simply to bare its teeth ?- and neither seems compelling enough for Alan & the Gang to act before the next meeting, in August...