Word: fed
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Dates: during 1990-1999
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...this any way to treat the most promising recovery in years? With the U.S. economy finally showing solid growth, the Federal Reserve has jacked up short- term interest rates three times since February and is widely expected to raise them again this week. Never before has the Fed moved so aggressively to battle a threat of inflation that few others...
Critics of the central bank contend that Fed Chairman Alan Greenspan is jeopardizing the recovery by fighting the wrong war. Not only is inflation dormant, they argue, but Americans are working more efficiently in a fiercer, more global competition. The result is that today's U.S. economy can grow faster with fewer price increases than ever before. "The historic connection between economic growth and inflation has been broken," declares General Mills chairman H. Brewster Atwater Jr., whose company slashed the price of Wheaties 10% earlier this year. "There is very little evidence of any inflation in any of the businesses...
...recovery and inflation is still declining," says Ross DeVol, an economist with the WEFA Group economic consulting firm. "That is unprecedented in the postwar period." Declares Ed Yardeni, chief economist for the C.J. Lawrence investment firm: "By launching what it calls a pre-emptive strike against inflation, all the Fed has done is perpetrate a meltdown in the stock and bond market and raise the serious risk of dramatically slowing the economy...
...Washington the Clinton Administration has been of two minds about the Fed's actions. While White House officials see no threat of renewed inflation, they would be glad if the Fed's moves kept the economy from growing so rapidly that it peaked before the 1996 election. At the Fed, meanwhile, the expected arrival of Clinton nominees Alan Blinder and Janet Yellen, who could be more tolerant of inflation, has the five holdover members groping for new formulas for battling it. The most draconian of these would raise interest rates whenever unemployment falls below 6.5%. (It now stands...
Although leaders of AT&T, General Motors and other corporate giants expressed little fear of a slowdown during a business conference last week, higher interest rates have already begun to hurt some industries. With the Fed's moves helping to drive the interest on 30-year, fixed-rate home mortgages from 6.7% in October to 8.7%, builders have lowered their estimates for 1994 housing starts by 4%. At the same time, the flood of mortgage refinancings that put hundreds of millions of dollars in homeowners' pockets has all but dried up, closing off a valuable source of extra cash...