INTEREST RATE RISE SHELVED, FOR NOW INFLATION APPEARS UNDER CONTROL All Editions.=.5 Star. 4 Star. 3 Star. 2 Star. 1 Star

The Fed's decision came against a background of growing political debate about how fast the U.S. economy can grow without adding to inflation - with Republican presidential candidate Bob Dole arguing that the economy can expand much faster than the Fed's target of 2 percent to 2.5 percent...

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Bibliographic Details
Published inThe Record (Hackensack, N.J.)
Main Author By JOHN M. BERRY, Washington Post News Service
Format Newspaper Article
LanguageEnglish
Published Bergen County, N.J North Jersey Media Group Inc 25.09.1996
Subjects
Steinberg, Bruce
WASHINGTON
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Summary:The Fed's decision came against a background of growing political debate about how fast the U.S. economy can grow without adding to inflation - with Republican presidential candidate Bob Dole arguing that the economy can expand much faster than the Fed's target of 2 percent to 2.5 percent a year. Tuesday's decision not to raise rates indicates that top Fed officials, too, are willing to experiment with somewhat lower levels of unemployment (and, temporarily, faster growth) than they would have been comfortable with in the past. Analysts and investors began to anticipate that the Fed would raise rates when economic growth strengthened far more than expected during the spring, when the gross domestic product rose at an inflation-adjusted 4.8 percent annual rate. But Fed policy-makers held back from boosting rates at their meetings in July and August amid signs that growth was tapering off after that torrid spring quarter. "If the forthcoming data confirm the slowing trend evident in recent data, the Fed can remain on hold even after the election is past," [Bruce Steinberg] said. "But if wage and employment data show further tightness in the labor market, the Fed will respond by tightening monetary policy."