Fed Not Expected To Raise Rates This Month

By John S. McClenahen Two weeks before the Federal Open Market Committee (FOMC) is slated to hold its next meeting, economists expect that Chairman Alan Greenspan and his colleagues won't raise U.S. short-term interest rates. The interest-rate-setting Fed panel has scheduled a two-day meeting for June 25 and 26. The current federal funds rate of 1.75% is "unsustainable," says London-based BNP Paribas economist Paul Mortimer-Lee, but he does not expect the Fed to begin tightening the money supply until this year's third calendar quarter. If the U.S. unemployment rate, down unexpectedly in May to 5.8%, falls further, "the Fed might tighten in August," suggests Bruce Steinberg, chief economist at Merrill Lynch & Co., New York. But he's betting that the unemployment rate will rise again and suggests that the FOMC's Sept. 24 meeting is a better bet for an increase in the federal funds rate. Maury Harris, chief U.S. economist at UBS Warburg LLC, New York, believes a rate rise will be put off even later than that. "We still do not anticipate a 25 basis-point tightening before November," says Harris.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.