Raise Rates

THE STOCK MARKET somersaulted last week, as speculation about the strength of the economy and the Federal Reserve Board raising interest rates boosted volatility.On Monday, reports that the Fed would raise rates made the Dow Jones industrial average average fall nearly 147 points. By Thursday, the Dow had regained the loss amid growing confidence that the economy is not overheating.The wild ride has some concerned that the market is overvalued and that it's only a matter of time before investors take a beating.

Baltimore officials hope to draw more money from city-owned garages downtown, raising rates at garages on Caroline, Baltimore and West streets while adding a new monthly overnight plan at the St. Paul Street garage. The city's Board of Estimates is set to vote Wednesday on the proposal, which officials say is necessary to maintain the parking facilities. The Parking Authority of Baltimore City, which recommended the increases, said the new, cheaper option on St. Paul Street will make parking more affordable for people who live nearby.

WASHINGTON -- Senior Federal Reserve officials confirmed yesterday that the central bank is poised to raise interest rates repeatedly in the months ahead, with some policy-makers embracing a controversial formula that could prompt them to call for rate increases whenever national unemployment falls below 6.5 percent.Now that the recovery is picking up speed and the economy is generating hundreds of thousands of new jobs each month, Fed officials say they are convinced that short-term interest rates must go considerably higher to prevent inflationary pressures from building.

State regulators considering Baltimore Gas and Electric Co.'s request for higher rates will hear this week and next from the people least likely to agree: BGE's ratepayers. So far, though, the volume is hardly deafening: Only one person spoke Monday night at the first of five public hearings about the case. "This is pretty sad," said Julie Grudzinskas of Annapolis after giving the evening's only testimony. "It's pathetic, actually. But I know why more people aren't here. ... It's daunting.

NEW YORK -- Bear, Stearns & Co. chief economist Wayne Angell said the Federal Reserve will probably raise interest rates by a half-point when its policy-making committee meets next week."

LAST WEEK, the Shadow Open Market Committee, a watchdog group of mostly academics that scrutinizes the actions of the Federal Reserve, said it was concerned that rising wages and an increasing money supply would lead to inflation.Indeed, the group recommended that the central bank raise interest rates to slow the growth in the money supply. Fed Chairman Alan Greenspan, speaking to Congress last month, said the economy's performance was "exemplary," with inflation falling despite the fact that unemployment was at a 24-year low.We asked experts whether a bump in rates might be in order.

NEW YORK -- After nine months of predicting changes in Federal Reserve monetary policy that never occurred, investors and traders in the credit markets expect today's meeting of the Federal Open Market Committee will result in an agreement by Fed officials to hold short-term rates stable.A decision by the committee to maintain rates would modify its assessment in May, when Fed officials voted to hold rates stable for the immediate future but hinted strongly at their willingness to raise rates if inflation worsened.

The price of a barrel of crude hit a record high this week. Housing prices continue to soar. Health care and insurance costs are up by double digits. Food is getting more expensive. Utility prices are jumping. Tuition costs are out of control. Sounds as if it might be time to dust off those circa 1974 "Whip Inflation Now" buttons that were once the laughingstock of the Ford administration, right? Actually, the Federal Reserve says not to worry - at least for now. The Fed raised a key interest rate another quarter-point yesterday and indicated that its more-than-yearlong campaign to contain inflation can continue at an unhurried pace.

A lower-than-expected increase in wage and benefits costs helped ease worries yesterday that the Federal Reserve will raise interest rates next month and sent stock prices soaring.The Dow Jones industrial average, the most widely followed market gauge, rose 227.64 points, closing at 10,622.53. The rally extended Wednesday's 92-point gain. It was the Dow's biggest advance since it rose 235.24 on Sept. 3.The market has been dominated in recent weeks by debate on inflation and interest rates.

Talk about mixed signals.Over here is the green light: an accelerating economy spewing products and jobs.And here, at the same crossroads, is the 6-foot-4 cop with both hands raised: half a decade of meek inflation.What's a central banker to do?Tossed salad is common fare for the Federal Reserve when it sorts through economic indicators. But rarely are the signs as contradictory as they will be Tuesday, when top Fed officials next meet to set interest-rate and money-supply policy.The U.S. economy is buzzing into its seventh straight year of growth.

Having taught in Baltimore City for 31 years, including 22 years at Western High School — and having recently retired — I feel a few points need be addressed regarding the op-ed column, "Baltimore's graduation rate: a success story still being written" (March 28). Much has been made recently of the stunning improvement in graduation rates in Baltimore City; very little has been made of some of the reasons. For years at my old school, roughly 20 or 25 seniors (about 10 percent)

Company bringing 25 jobs to Cumberland CUMBERLAND : A company that manages supplies for the aerospace industry says it is opening a warehouse in Cumberland that will create 25 jobs. Patton-air is a division of the British company Umeco PLC. Gov. Martin O'Malley says Pattonair has signed a supply agreement with ATK Tactical Propulsion and Controls, which operates out of the Allegany Ballistics Laboratory in nearby Rocket Center, W.Va. The Maryland Department of Business and Economic Development is providing Pattonair with a $50,000 conditional grant to assist with startup costs.

WASHINGTON -- Unless you planned a vacation to New Zealand, you probably don't care much that its central bank raised its lending rate to a record high this month. But U.S. Federal Reserve Chairman Ben S. Bernanke cares, and his concern is likely to arise when the Fed's policymaking body begins a two-day meeting today. New Zealand raised its rate to 8 percent because the global economy, enjoying the longest streak of above-average growth in more than three decades, is so hot that it's sparking inflation, or rising general prices.

A member of the state's hospital rate-setting commission took his colleagues sharply to task yesterday for approving an extra boost in hospital rates over the next two years without discussion. Joseph R. Antos said last month's decision means Marylanders will pay an extra $119 million over the two years that the hospitals don't need.

WASHINGTON -- The Ben S. Bernanke Federal Reserve looked much like the Alan Greenspan Federal Reserve yesterday, as the central bank boosted interest rates for a 15th straight time and signaled there likely will be another increase in May. In his first meeting as chairman of the nation's independent monetary authority, Bernanke showed he was just as willing as Greenspan to stage pre-emptive strikes against inflation expectations. In boosting its benchmark short-term interest rate by a quarter percentage point, to 4.75 percent, the Fed imposed heavier borrowing costs on Americans who have home-equity loans or other short-term adjustable-rate loans.

I recently took a business trip and drove more than 800 miles. I heard that the Internal Revenue Service mileage reimbursement rate had increased, but when I submitted my expense report I was told the company wouldn't adopt the new rate until January. I assumed that the company had to automatically readjust its rate. Can you clear this up for me? For starters, companies don't have to adopt the IRS' standard mileage rate. If your company reimburses you for mileage at the current rate, which the price of gas has pushed up to 48.5 cents a mile - from 40.5 cents - for the final four months of 2005, then the IRS considers you to be reimbursed for mileage.

AT&T plans to raise ratesAmerican Telephone & Telegraph Co., signaling it believes the long-distance pricing wars are history, said yesterday that it was raising rates on its business and consumer long-distance services.It said rates for most business services would increase an average of 3.9 percent, while rates on direct-dialed consumer calls would increase overall by less than 1 percent.

The way Wall Street moans about rising interest rates, it would seem that no good could come of them. Tell that to people with cash in the bank or in a money market mutual fund. When Federal Reserve policymakers meet Tuesday, they are almost certain to raise their benchmark short-term interest rate a quarter of a point, to 4 percent. It would be the 12th increase since mid-2004. That move should assure that rates on bank certificates of deposit and money market accounts will continue to move up as well.

The Federal Reserve chose inflation-fighting over public relations yesterday, raising its benchmark short-term interest rate by another quarter-point to 3.75 percent against suggestions that it pause in deference to Hurricane Katrina. The 9-1 vote to raise the federal funds target rate by another quarter percentage point to puts the key interest rate at its highest level since August 2001. In response to the Fed's action, commercial banks began raising their prime lending rates by a corresponding amount, to 6.75 percent.