Central Bank

WASHINGTON -- U.S. Federal Reserve policy-makers may decide to cut the overnight bank lending rate if Asia's economic crisis slows the U.S. economy more than currently expected, Federal Reserve Gov. Laurence Meyer said yesterday.While he said he expects the recent economic turmoil in Asia to cut U.S. growth by "roughly" half a percentage point this year, that estimate could increase if the Asian situation intensifies, and XTC lead to lower interest rates, he suggested. If, on the other hand, the Asian crisis doesn't result in the expected slowdown, the Fed might see a need to raise interest rates, he said.

WASHINGTON -- Inflation remained absent from the U.S. economy in recent weeks as Asia's financial crisis restrained growth and unleashed a flood of cheaper imports that helped keep prices in check, the Federal Reserve said yesterday."

NEW YORK -- The Federal Reserve Board has been looking at the wrong indicators, and it should be cutting interest rates instead of holding them where they are, the chief economist with a Legg Mason Inc. subsidiary said yesterday.Scott F. Grannis, director and chief economist with Pasadena, Calif.-based Western Asset Management Co., said the Fed should have already cut long-term interest rates to 4 percent or 5 percent. The rate on the 30-year Treasury bond is 6.1 percent.He said the economy is slowing, the dollar is too high and prices on commodities and consumer goods are falling.

ZURICH, Switzerland -- A long-awaited Swiss report about wartime dealings in Nazi gold concluded that Swiss National Bank officials knew that some gold sent to Switzerland had been looted from occupied areas and confirmed allegations that the gold included some stolen from Holocaust victims.The report, commissioned by the Swiss government and issued yesterday by an international panel of historians, said Swiss bank officials turned a blind eye toward the origins of much of the gold, which included jewelry and coins belonging to Jews sent to concentration camps and death.

Global markets staggered yesterday as a French bank triggered a worldwide financial scare by halting withdrawals from investment funds that have lost money on high-risk U.S. mortgage securities. The central banks of major economies, including the United States, responded by pumping tens of billions of dollars into their banking systems in an effort to shore up investors' confidence. On Wall Street, the Dow Jones industrial average plunged 387.18 points, or 2.8 percent, to 13,270.68, its largest one-day point loss since February.

NEW YORK -- U.S. stocks fell for a third day yesterday, led by oil and auto companies after a central bank official predicted an economic slowdown. Citicorp led banks lower on concern that Asian market turmoil might hurt overseas profits."

FRANKFURT, Germany - The European Central Bank took a baby step yesterday toward intervening in world markets on behalf of the downtrodden euro, using its foreign reserves to buy up $2.5 billion worth of the currency and briefly halting its tailspin against the dollar. Wim Duisenberg, president of the central bank, insisted that the move was little more than a routine portfolio adjustment and that "intervening in the market was not part of the motive." But currency analysts said the bank was hoping to prop up the currency, or at least protect it from tumbling even further.

WASHINGTON - The Federal Reserve is in a bind, trapped by its optimistic words of the past and an economy suddenly not living up to expectations. When Chairman Alan Greenspan's central bank meets today, analysts said, the Fed is likely to increase interest rates modestly even though economic conditions do not appear to merit it. Increasing interest rates when the economy appears to have lost steam is a choice that no central bank likes to make, especially...

WASHINGTON -- Federal Reserve policy-makers won't hesitate to raise interest rates again if the economy doesn't slow and inflation shows signs of accelerating, Fed Chairman Alan Greenspan suggested yesterday.The Fed is prepared "to act promptly and forcefully" to increase borrowing costs to sustain an expansion that's on track to become the longest in U.S. history, Greenspan said in his twice-yearly testimony to Congress."Should productivity fail to continue to accelerate and demand growth persist or strengthen, the economy could overheat," Greenspan told the House Banking Committee.

WASHINGTON -- Federal Reserve Board policy-makers signaled yesterday that they are prepared to raise U.S. interest rates if economic growth does not slow and inflation accelerates -- even as they left the overnight bank loan rate unchanged at 4.75 percent.The Federal Open Market Committee (FOMC) announced that it adopted a bias toward higher borrowing costs, saying it is "concerned about the potential for a buildup of inflationary imbalances that could undermine the favorable performance of the economy."