Short-lived comfort from the Fed

Article Abstract:

US interest rates are less likely to be raised in the short-term due to the crisis in the financial markets of South East Asia. This will affect US exports to Asia, and imports from Asia will be cheaper due to the rise in value of the dollar. Stock price drops in the US could also depress consumer spending. There is concern that inflation could still be a problem and that the impact of events in Asian financial markets and US stock markets may not dampen inflation as much as expected. US wage inflation is one cause for concern.

Economic policy, United States. Federal Reserve Board, United States economic conditions

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Out of control

Article Abstract:

US interest rates could be raised above forecast levels, according to SBC Warburg. Rates could rise to 6.5% by spring 1998. Economic growth is unlikely to slow enough to prevent inflation. Personal incomes are rising because of a drop in unemployment and a rise in real wages. Housing sales appear strong so consumer durables sales are also likely to be strong. Profits could be affected by higher costs and wages and this is likely to result in inflation once costs are passed on through price rises.

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The Fed's problem with inflation

Article Abstract:

US inflation is low in June 1997, with producer prices dropping for the fove previous months and consumer price rises at a low level. Inflation reflects interest rates some six to 18 months previously and interest rate policy has not loosened. There are arguments that policy should tighten since the US is at a late stage in the economic cycle when bottlenecks are becoming a problem. Economic growth may accelerate as one-off factors disappear, but it is unclear whether bottlenecks are a problem.

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