Newspaper article The Christian Science Monitor

Clinton Could Stack Fed with Democrats FEDERAL RESERVE WATCH

Newspaper article The Christian Science Monitor

Clinton Could Stack Fed with Democrats FEDERAL RESERVE WATCH

Article excerpt

Help Wanted: Federal Reserve Board Governors. Two positions available. Should understand economics and banking and be able to work with a chairman who hardly ever smiles. Ability to give cryptic speeches a plus. Guaranteed work for 14 years. Base salary: $123,100 a year.

President Clinton, who has shown an ability to work with Federal Reserve chief Alan Greenspan - a Republican - now has the opportunity to appoint two new members to the important seven-member economic and regulatory board.

Last week, Lawrence Lindsey, an appointee of President Bush, notified the White House he would be leaving after five years as a governor to work in the private sector. This follows Mr. Clinton's decision to tap another governor, Janet Yellen, to head up the Council of Economic Advisers. The vacancies come at a particularly sensitive time for the US economy. There are some signs the economy may be too ebullient. On Friday, the government reported employment in December increased by 260,000 - this is above the 150,000 rate many economists consider appropriate given the 5.3 percent unemployment rate. The news led to a roller coaster ride for stock prices on Wall Street, which ultimately decided the economic statistic was not likely to upset the bull market yet. "The economy is on the cusp of potential overheating. We may soon see the first potential rise in inflation," says John Burgess, a managing director on Bankers Trust bond desk in New York. Despite Mr. Burgess's concerns, most Fed watchers do not expect the Fed's Open Market Committee - which guides short term interest rates - to make any moves when it meets on Feb. 4 and 5. Last week, Alice Rivlin, the board's vice chairman (also a Clinton appointee), described the economy as not too hot or too cold. The strength in employment is likely to be mirrored in the estimate of the nation's gross domestic product for the fourth quarter. …

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