Alan Greenspan, Wall Street, Short Term Interest Rates, Monetary Policy, Business
SOURCE: CNN MONEY
Changing gears at the Fed?
Three speeches by Fed heads this week may be a signal that the central bank is changing its stance.
October 8, 2004: 9:40 AM EDT
NEW YORK (CNN/Money) - So you thought rising interest rates were inevitable? You were convinced Alan Greenspan would hike rates no matter what because short-term rates were too low?
Well, think again.
In the last two days, three important Federal Reserve officials have given speeches that look like they are intended to CHANGE the prevailing view on Wall Street that the Fed is on an inexorable march toward raising short-term interest rates.
It started on Wednesday with a speech from Bill Poole, president of the Federal Reserve Bank of St. Louis. That speech that spun my head around.
Remember the Fed's terse policy statements that are issued after each interest-rate setting meeting. Over the past few months the Fed has indicated it would move slowly but surely toward higher rates at a "measured" pace, and that has been interpreted as a pledge that higher rates are coming, no matter what.
But on Wednesday Poole said this is NOT an "ironclad" commitment, and that the Fed would move faster or slower "depending on how the economy evolves."
Now Wall Street has been speculating that the Fed might "pause" for awhile after hiking its key rate from 1.75% to 2.0% at the November meeting. Could it be Mr. Poole was...
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