UBS Warburg's Harris: No Interest Rate Cut This Year

ByJohn S. McClenahen Some economists expect Alan Greenspan and his colleagues on the Federal Open Market Committee to reduce the target for the influential federal funds rate to 1.5% (it's now 1.75%) at their next scheduled meeting on Sept. 24. Markets put a better-than-50% probability on a 25-basis-point cut by yearend. But not Maury Harris, chief U.S. economist at UBS Warburg LLC, New York. "For now, we are sticking with our call that the Fed will not ease at all this year, mostly because we reject the double-dip hypothesis," says Harris. That scenario has the U.S. economy, which was in recession for the first three calendar quarters of 2001 and mustered just 1.1% real growth in this year's April-June quarter, contracting again. "Growth may have slowed, but it has not ground to a halt," stresses Harris.