Newspaper article THE JOURNAL RECORD

Federal Reserve Not Expected to Raise Interest Rates This Week

Newspaper article THE JOURNAL RECORD

Federal Reserve Not Expected to Raise Interest Rates This Week

Article excerpt

WASHINGTON (AP) -- The Federal Reserve is widely expected to pass up the chance to boost interest rates this week, and the most optimistic economists believe Fed policy-makers are close to declaring victory in their 14-month campaign to engineer a soft landing for the economy.

The central bank's Federal Open Market Committee, comprising Fed board members in Washington and regional bank presidents, meets privately today before releasing a midafternoon statement of its decisions on interest rates.

Most private economists said Monday they expect the central bank to repeat its July decision to hold rates unchanged while issuing a statement that tells markets they still worry about inflation threats.

"We are pretty confident that they are not going to raise rates this week," said Christopher Wolfe, an equities market strategist for J.P. Morgan in New York.

"We haven't seen any signs in the economic data that would cause concern."

Since June 1999, the central bank has raised rates six times, trying to bring about a soft landing in which growth slows enough to keep inflation under control without dragging the economy into recession.

Those rate increases have pushed short-term borrowing costs for millions of Americans to their highest levels in nine years. The prime rate, the benchmark rate for many consumer and business loans, is now at 9.5 percent, up from 7.75 percent when the Fed started raising rates 14 months ago.

The Fed passed up the chance to raise rates a seventh time at its last meeting, June 27-28, and economists believe there are more reasons for the central bank to remain on hold this time around as evidence of a slowdown grows.

Many analysts believe the economy, which grew at a surprisingly strong 5.2 percent annual rate in the April-June quarter, has slowed to growth of around 3.5 percent to 4 percent in the current quarter.

"We believe the current Fed tightening cycle is over," said Bruce Steinberg, chief economist at Merrill Lynch in New York.

Other analysts are not so optimistic. Many believe the Fed will remain on hold at the August meeting and the following meeting on Oct. …

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