Word: fed
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Dates: during 1990-1999
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...toss-up. Right now Wyss sees a fifty-fifty chance of an outright recession before the end of the year 2000. Wyss would have shifted the odds to favor recession if the Federal Reserve had continued to hold out against interest-rate cuts. But in late September the Fed did push through a quarter-point reduction in the so-called federal-funds rate, which banks charge one another on overnight loans--the first change since an equally small increase in March...
Wyss, Sinai and other members of TIME's board think the new cut by itself is too small to have much impact. Other rates, on bonds for example, had already been adjusted downward in anticipation of a Fed move. But it is a heartening sign that Greenspan and the other Fed governors have become convinced that a worsening slowdown is now a greater threat than renewed inflation. Since Greenspan has long preferred to move rates in a series of small, repeated steps, the economists on TIME's board devoutly hope that more reductions will follow, late this year...
...from its current astonishingly slow pace--an annual rate of less than 1% in each of the first two quarters of 1998. But Roach's estimate of a 2.9% consumer price index rise in 1999 is the highest of the board's guesses, and Greenspan and the Fed might not find that acceptable...
...save the IMF, seem to be more global-minded than they give themselves credit for. But the tax-cut plan faces opposition from the last world leader with enough credibility left to kill it: Alan Greenspan, who single-handedly bullied Clinton into fiscal discipline six years ago. The Fed chairman is worried enough about inflation, now that he's cutting interest rates; he's not about to add more fuel to the fire. And very little U.S. economic policy gets made without Alan Greenspan's endorsement...
...Wall Street insiders say what really spooked the Fed was indications that Long Term Capital had off-balance sheet derivative contracts with a value of more than $1 trillion. Derivatives are financial instruments that bet on the future direction of interest rates, stock indexes or currencies. Defaults representing less than 1% of that whopping sum could have sunk the fund and punished banks and investment firms around the world...