Merrill: Fed Unlikely To Raise Rates Until Mid-2005

ByJohn S. McClenahen Chairman Alan Greenspan and the 11 other voting members of the Federal Open Market Committee (FOMC) are slated to hold their first meeting of 2004 at month's end. But don't look for the FOMC to raise the influential federal funds rate then, says Merrill Lynch & Co. The New York-based securities firm believes the FOMC is unlikely to raise the rate, now at 1%, until mid-2005, much later than analysts who believe a boost could come as soon as this June. "In our view, the Fed will probably not begin to tighten until core inflation approaches the 2% threshold or what is widely perceived to be the level that is consistent with price stability," says Merrill.