Word: frb
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...Federal Reserve Board alowed a few more steps last week to tighten credit (see State of Business), more and more Wall Streeters wondered whether the FRB can control a new inflationary upsurge as well as it did during the 1955-57 boom. How widespread these doubts are was reflected in the stock market, where stock prices during the week rose to a new high for the year. Wall Street was highly skeptical about the power of the FRB because, in trying to control the new inflation it fears, the FRB is up against a big problem it did not have...
...market was at the top of a speculative binge that had boosted the price of U.S. bonds (TIME, June 30). Many, gambling on a continued rise, bought the new bonds with nothing down. But in June it also became plain that the recession had hit bottom and the FRB might have to tighten credit. Bond buyers saw the promise of higher interest ahead and dumped their holdings. The speculative bubble burst. As prices fell, the yields reached as high as 3! on Government bonds. The Government bond market turned so weak that when the Treasury floated a $16.3 billion issue...
...Federal Reserve Board last week demonstrated the kind of fiscal responsibility that Economist Reierson was talking about. Deciding that it was time once again to lean gently against the economic winds. FRB gave the San Francisco Reserve Bank permission to hike its discount rate from 1¾% to 2%, the first such credit-tightening boost in eight months. The other eleven Federal Reserve banks will probably follow suit soon, thus signaling that 1) the Fed agrees that the recession is over, and 2) it is on guard to make certain that the recovery proceeds in a sound, orderly fashion...
...recovery will spread. "Even the incomplete data for the second quarter add up unequivocally to more than a seasonal gain." Not only did defense outlays and public works shoot ahead, but housing, car sales and production of steel, lumber, apparel, aircraft, petroleum were all on the upgrade. The FRB index of production, which rose a point in May, will probably be up another point for June, said FORTUNE. "Together, these gains add up to an all-around recovery." FORTUNE'S predictions through 1959: the gross national product will rise $50 billion to $470 billion...
...FRB DISCOUNT RATE will not be cut in immediate future despite flurry of rumors to contrary...