Fed meets today

Amy Scott Sep 20, 2006
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Fed meets today

Amy Scott Sep 20, 2006
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TEXT OF STORY

BOB MOON: The country’s central bankers meet today to set interest-rate policy. Analysts expect the Fed will hold rates steady, at 5.25 percent. Here’s Marketplace’s Amy Scott.


AMY SCOTT: A recent flurry of data has most analysts convinced the Fed will sit tight this time around.

Consumer and wholesale inflation appear contained. The rate of new home construction reached its lowest level last month in more than three years.

Jay Bryson is an economist with Wachovia Corporation.

JAY BRYSON: If the Fed was concerned about inflation, I think they have less reason to be so now, and then with the housing market weakening, that could lead to just slower growth in the future as well.

Other signs suggest inflation isn’t kicked yet. Labor costs jumped 7 percent in the first half of this year.

Economist Kathleen Camilli is concerned about the rising price of what are called “intermediate materials” like textiles and lumber.

KATHLEEN CAMILLI: Those have been on an upward trajectory, they’re now up 8.7 percent year-over-year, and they’re the highest rate of acceleration since 1979.

So while some economists predict the Fed will start lowering interest rates again early next year, Camilli says it’s too early to tell.

In New York, I’m Amy Scott for Marketplace.

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