UBS Raises 2004 GDP Forecast

By John S. McClenahen Next year's U.S. economy is looking better to UBS Investment Research, New York, than it has previously. With an economic pick-up "on track" for the second half of this year, UBS now sees inflation-adjusted GDP reaching 3.5% in 2004, three-tenths of a percentage point higher than the 3.2% it previously foresaw. So-called core consumer inflation -- overall consumer prices changes minus usually volatile food and fuel price changes -- should be in the 1.5% to 2% annual rate range during each of next year's four calendar quarters, UBS predicts. As for Alan Greenspan and his 11 colleagues on the Federal Open Market Committee (FOMC), UBS expects them to hold the federal funds target rate at 1% until the second half of 2004, when it expects the FOMC to begin to "modestly tighten" the U.S. money supply.

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