Newspaper article THE JOURNAL RECORD

Fed Issues Upbeat Economic Report

Newspaper article THE JOURNAL RECORD

Fed Issues Upbeat Economic Report

Article excerpt

WASHINGTON (AP) _ The U.S. economy is growing nicely with few signs of inflation, the Federal Reserve said Wednesday in an upbeat report that could ease concern about a new rise in interest rates.

"The economy expanded moderately in January and February despite unusually severe weather in the East and Midwest," the Federal Reserve said in a survey of regional activity.

Even the weather impact was not all gloomy, the report said. Ski resorts and other winter getaways got a boost.

Perhaps more significantly, the survey said, "Overall, only limited price pressures are reported."

Analysts said the jitters of financial markets should be calmed by the findings.

"The report said we have the best of both worlds _ fairly solid economic growth with not much inflationary pressure," said Sung Won Sohn, chief economist for Norwest Corp. in Minneapolis. "I think inflation is nowhere to be found, not in the tan book and not outside of it."

The periodic Federal Reserve report is known in some quarters as the tan book and in others as the beige book, although the softbound document often is published with plain white covers.

Sohn said the good news could head off another rise in interest rates at the March 22 meeting of the Federal Open Market Committee, the central bank's monetary policy-setting panel.

But analysts noted that Fed Chairman Alan Greenspan described a Feb. 4 boost as a pre-emptive strike against inflation; they said it could be in the offing.

Cynthia Latta of DRI-McGraw-Hill in Lexington, Mass., said the report's analysis of inflationary pressure means the Fed governors "are pleased with their past performance. It doesn't mean they're not going to raise rates in a few weeks."

"The only problem is the weather, and fiscal and monetary policy can't do a thing about that," she said.

The economy boomed in the final three months of 1993, expanding at a 7. …

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