Which way for the Fed?

Marketplace Staff Sep 8, 2006
HTML EMBED:
COPY

Which way for the Fed?

Marketplace Staff Sep 8, 2006
HTML EMBED:
COPY

SCOTT JAGOW: We got a pile of new economic numbers this week. And to be honest, we’re not sure which way is up. Some things point to a slowdown in the economy. But inflation is still a big concern. And that means the Federal Reserve is gonna have a tough decision later this month on interest rates. More now from Sarah Gardner.


SARAH GARDNER: The Fed’s “Beige Book” survey hints at slower growth and consumer spending. That’s a decent argument for leaving interest rates alone or even lowering them. But the Labor Department reports labor costs rising at their fastest pace in 16 years. That raises questions about possible inflation and the need to raise rates. Hugh Johnson is chairman of Johnson Illington Advisors:

HUGH JOHNSON:“I think that the Fed’s going to pay more attention to their own work, the Beige Book.”

Johnson believes the Fed will continue to leave interest rates alone when it meets later this month. David Jones, president of DMJ Advisors agreesa€¦

DAVID JONES:“So far at least it looks like manufacturers are having trouble passing on higher energy and labor costs into higher prices partly because of global competition.”

Still, some hawkish central bankers like Richmond’s Jeffrey Lacker aren’t mollified. Lacker told reporters this week: “Moderating growth doesn’t change inflation. Central banks change inflation.”

I’m Sarah Gardner for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.