Word: feds
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Dates: during 1980-1989
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After the latest numbers became public, Federal Reserve Chairman Alan Greenspan gave moneymen an anxiety attack by his frank acknowledgment of the problem. Testifying before Congress, Greenspan called the CPI report "disturbing" because it suggested that the U.S. economy was close to overheating despite the Fed's eleven-month effort to slow it down by subtly tightening the credit supply. Noting that last week's report followed January's startling 1% rise in the Wholesale Price Index, a leap of 12.7% on a compounded annual basis, Greenspan warned, "If inflation re-emerges, I think a recession will move...
...report cast a spotlight on the quiet but crucial duel between Greenspan and George Bush over U.S. economic policy. In its stand against inflation, the Fed has resolutely tightened credit since last March, when the prime rate stood at 8.5%. But Bush, even though he pledged during the fall campaign to drive inflation down to 2%, insisted two weeks ago that he is not "overly concerned" about the threat of rising prices and cautioned that he "would not like to see" the Fed push interest rates higher. In Tokyo last week, Bush asserted that the Fed might be overreacting...
Nonetheless, the separate perceptions that divide the White House and the Fed remained glaringly obvious. On the day before the CPI figure was released, Greenspan told Congress that "the current level of inflation, let alone an increase, is not acceptable." But on the same day, Michael Boskin, chairman of Bush's Council of Economic Advisers, testified, "I do not yet see a serious increase in the underlying inflation rate." Boskin edged a bit closer to the Fed chairman by adding that if prices do begin soaring, the Administration will "take quick action" and "support a policy that avoids an acceleration...
...seem unduly optimistic. The higher rates would boost the Government's cost of borrowing for the bailout, as well as worsen S & L losses by raising the interest that ) the thrifts must pay depositors. To calm fears of a possible run on deposits, Greenspan said last week that the Fed will provide cash to any insolvent S & Ls that need it to meet withdrawals...
...loath to initiate. Bush's strategy of leaving the hard choices to Congress has led so far to budget gridlock. Concedes a senior Administration official: "If Congress accepts our budget, economic growth and inflation and interest rates will take care of themselves. But if the bickering drags on, the Fed is going to give us all a hard time...