Business Week discusses why Greenie is on hold for a long long time:

“The economy is cooking. Business spending is rising and the job market has turned up. The pickup in growth, in the U.S. and abroad, has sent commodity prices soaring and fanned fears of a resurgence of inflation. The central banks of Australia and Britain have already raised interest rates, and the U.S. bond market figures the Federal Reserve will follow suit early next year.

Don’t count on it. Although economic growth hit a staggering 7.2% in the third quarter and is expected to settle in at a zippy 4% over the next few quarters, Fed Chairman Alan Greenspan and his cohorts believe they can take their time before raising rates. Despite investors’ skepticism, Fed insiders believe the U.S. is in a unique period where inflation is so low — and the economy still boasts so much slack — that they can relax and let things rip. “In these circumstances,” Greenspan said on Nov. 6, “monetary policy is able to be more patient.”

You know my thoughts: I’m on record saying I think there are no rate increases until the Summer at the earliest.

Source:
Why Greenspan Will Just Let It Ride
by Rich Miller
Businesss Week November 24, 2003

http://www.businessweek.com/magazine/content/03_47/b3859057.htm

Category: Finance

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