Dont Expect A Holiday Interest-Rate Cut

Will the Federal Reserve Board give the U.S. economy a holiday present when it next meets December 22? A lot depends upon what gift-buying consumers do between now and then. If holiday sales run 5% ahead of an average year, something that's widely anticipated, and there's no intervening international economic crisis, Chairman Alan Greenspan and his Federal Open Market Committee colleagues are unlikely to reduce the highly influential federal funds rate by even 25 basis points (one-quarter of a percentage point) to 4.5%. But that doesn't mean U.S. industry won't be lobbying for further reductions. For example, immediately after Tuesday's 25 basis point reduction in the federal funds rate (to 4.75%) by the Fed, National Assn. of Manufacturers President Jerry J. Jasinowski was calling for "continued interest rate reductions . . . to prevent a slowing U.S. economy from slipping into recession and the U.S. stock market from experiencing a serious downdraft."