The Fed's warning
Article Abstract:
The chairman of the Federal Reserve, Alan Greenspan, has issued a warning that US stock prices could have risen too far. His comments led to a drop in stock prices. Higher prices have helped push up capital spending which in turn has boosted efficiency. Increased capacity and greater efficiency help reduce the risks of inflation. Inflationary pressure is more likely to come from wage rises than stock price rises. Market forces are the best way for corrections in stock prices to be carried out.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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A questrion of degree
Article Abstract:
US interest rates have been raised in 1997 for the first time since Feb 1995 and this has led to instability for stock prices. US rates are higher in real terms than they were in 1994 and this could mean that share prices will not fall as much. Market concerns over high rates will mean less need to raise rates, since high bond yields will boost mortgage rates, so depressing economic growth. Stock prices are also seen as an inflation indicator by the Federal Reserve.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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The rule of 20
Article Abstract:
The rise in US interest rates in Feb 1997 led to a drop in stock prices but they later rose and the same could occur if rates are raised in May 1997. Inflation may have more impact on stock prices than interest rates have and higher rates could help suppress inflation which in turn helps stocks. Rate rises may not be sufficient to curb inflation, or alternatively could be high enough to dampen earnings which could mean a drop in stock prices.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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