Word: frb
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Gentle Braking. With peak production and annual personal income at a record $301.1 billion in June, few economists are seriously worried about the overall health of the U.S. economy. But no one wants to take chances. Instead of waiting, and risking a sharp decline later, the FRB and the Administration economists would much rather apply the brakes now, and do it gently. For one thing, the Government remembers all too well the way businessmen ran for cover in 1953 when the Treasury, with its 3 ¼% 30-year bonds, sharply contracted the money supply. For another, the move keeps...
...FRB, said the report, did not raise margin requirements fast enough or high enough to stop what the committee called the "unhealthy speculative developments" in the market since late 1954. The two recent 10-point margin boosts (which raised to 70% the amount of cash a purchaser must put up to buy stock) were assailed as too small. The committee questioned whether they had much influence in bringing speculation under control, although there was plain evidence that they had in the way the market has been acting ever since credit was tightened (see below...
...rise is not going to be unbroken. The FRB expects the pace to slacken a bit in the next few months, slowed by a "leveling off" of steel and automobile output, then finish the year with a rush in the fourth quarter...
Furniture and household appliances will be bought by 28.5% of the public, v. 26.9% in 1954, but they plan to spend $50 less than last year's outlay. More consumers plan to buy on credit. This year, the FRB reported, 60% of the car purchasers expect to buy on time, v. 56% a year ago, and 54% of the prospective household-goods purchasers expect to use credit...
...market hit a new high last week, the Federal Reserve Board boosted margin requirements, the amount of cash needed to buy a stock, by 10% (to 70%). This was the second increase in four months. Though the credit tightening was less than expected, FRB nevertheless hopes it will slow down the market's rise by cutting the amount of margin trading. Brokers' loans to customers in April were double the rate of the first three months, although the total amount of credit in the market is but a tiny percentage of the $176 billion value of the listed...