|
Home>News Center>World | |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
US Fed boosts rates, downplays Katrina fears Hiring is expected to slow. A reduction of 400,000 jobs over the next four months is forecast. In sticking to their rate-raising course, though, Fed policymakers suggested that the risk that high energy prices could touch off broader inflation was greater than the threat of slower economic activity. "Higher energy and other costs have the potential to add to inflation pressures," Fed policymakers said. Oil prices on Monday shot up more than $4 a barrel — the biggest one-day price jump ever — amid worries that a new storm could further hobble oil production facilities on the Gulf Coast. Prices calmed down on Tuesday. President Bush_ coping with sinking approval ratings — wants Congress to approve a massive reconstruction program for the Gulf Coast. The federal government's costs could reach $200 billion or more. Congress already has approved $62 billion. Rebuilding, once under way, should help energize overall economic activity and the jobs climate, though probably not until next year. All the billions of dollars expected to be pumped into the economy, however, are raising heightened fears about inflation, analysts said. "Clearly the Fed's main eye is on inflation," said Stuart Hoffman, chief economist at PNC Financial Services Group. "They are more worried about inflation because they view the setback to economic growth as temporary." The Fed said it would maintain a course of "measured" rate increases in the months ahead. Economists have come to view that as quarter-point bumps. Analysts had mixed opinions, though, on whether the Fed will raise rates at both of its next two scheduled meetings this year — on Nov. 1 and Dec. 13. Many believe that the Fed's key short-term rate, now at 3.75 percent, will be rising. Some think it could climb to 4.25 percent or 4.50 percent by the spring of next year. The sole dissenter to the Fed's decision to boost rates on Tuesday was Fed Governor Mark Olson. He favored leaving rates unchanged. Leading up to the Fed's meeting, there was speculation that policymakers might take a temporary break in their rate-raising campaign. "The central bank won't back off" until it's convinced that inflation isn't a threat to the economy, said economist Sung Won Sohn, president of Hanmi Bank.
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
