Should The Fed Lighten Up?
August 28, 1998
Some financial market experts think it's time the Federal Reserve cut interest rates to help ease deflationary pressures affecting a number of foreign economies. Here's their thinking:
- There's little chance of inflation in the U.S., so keeping interest rates high here could be throttling the ever-growing economy.
- Better growth here would cause us to buy more exports, thus giving troubled overseas economies a shot in the arm.
- Keeping the dollar -- the unofficial world currency -- too strong means making the world's money troubles worse.
Now, what one expert calls "Russia melting down on top of Asian flu," may finally give the Fed a reason to lower interest rates. But at its August 18 meeting, the Fed Open Market Committee voted to leave rates unchanged and, some sources say, even considered raising them.
Source: Anna Bray Duff, "Is The Fed Dropping The Ball?" Investor's Business Daily, August 28, 1998.
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