Raise Rates

WASHINGTON -- Federal Reserve officials were unanimous in deciding to raise short-term interest rates Feb. 1, but some of them initially expressed concern that the central bank was moving too quickly, according to minutes of the meeting released yesterday.Although the Fed's rate-setting group, the Federal Open Market Committee, remained united then, the minutes suggest that sentiment may be building that seven rate increases over the last 14 months may have been enough to prevent rapid growth from leading to inflation.

WASHINGTON - Looking at the past is no guide to predicting how quickly and aggressively the Federal Reserve will raise interest rates, Fed Chairman Alan Greenspan told Maryland's senior senator. In a letter released yesterday, Greenspan repeated his earlier comment that the current low rates "must be returned to a more neutral setting at some point." The timing and intensity of the Federal Open Market Committee's coming rate increases are highly uncertain. Financial markets are pricing in a quarter-point increase in the federal funds rate by the end of June and at least a full percentage point increase by the end of the year.

NEW YORK -- U.S. stocks skidded yesterday for a second day as a Federal Reserve effort to bolster the dollar failed to offset concern about an imminent increase in interest rates.Also hurting stocks was a weak bond market, where the 30-year Treasury yield climbed to 8.09 percent, up from 8.06 Tuesday and a 2 1/2 -year high.Mounting evidence of rising inflation led some investors to believe the Fed will raise rates when its policy-making committee meets Nov. 15. That was enough to erase the gains stocks made after the central bank starting buying dollars and selling Japanese yen and German marks.

WASHINGTON -- While the Federal Reserve is clearly determined to raise short-term interest rates further, comments by the central bank's top two officials suggest that it may not act at the next meeting of its policy-making committee on Dec. 20, preferring to wait until January or early February.The delay seems likely because top Fed officials made clear last week that they wanted to weigh information on the economy's health that will not be available until January. Fed officials also expressed little concern that tax cuts might widen the budget deficit and feed inflation next year.

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.

THE FEDERAL Reserve Board has raised interest rates twice this year to cool the economy and keep inflation from rising. This week, the Fed's interest rate-setting body -- the Federal Open Market Committee -- wrestles with the question once again. Will the Fed raise interest rates? If it does, what is the impact on the economy and the stock market?David WyssChief economist, Standard & Poor's DRI, Lexington, Mass.I am in the tightening camp. I think they are going to move. You look at the economy, and you look at 4.8 percent growth last quarter, and 4.1 percent unemployment -- and you have got commodity prices that are going up.Raising rates seems safer than not raising them.

It was sweet for 11 months, but the honeymoon between President Clinton and the Federal Reserve has finally come to an end.The beginning of the end came with bickering over the president's proposal to have just one agency regulate the nation's banks, a move that would take away some of the Federal Reserve's power. And now it seems Mr. Clinton could sue for divorce if the central bank raises interest rates early next year to fight inflation, as some rumblings from within the Fed suggest.The Clinton administration is delighted that the economy has finally started to advance, and the last thing it wants is for the Fed to slow it down by raising rates.

WASHINGTON -- For the fourth time in four months, the Federal Reserve is preparing to raise short-term interest rates. But its orderly plan to contain inflation might be disrupted by turbulence in the bond and currency markets, which is putting great pressure on the central bank to act more quickly and raise rates more sharply this time, economists said this weekend.Alan Greenspan, the Federal Reserve's chairman, has signaled for a year in appearances before Congress an intention to raise interest rates before inflation begins to creep up again.

SHOULD WARNINGS of an interest rate boost frighten long-term investors into unloading their stocks? No.Despite the booming economy -- unemployment at the lowest in 28 years, auto sales robust and leading indicators pointing up -- serious inflation signs are nonexistent. This has prompted many to conclude that the Federal Reserve will not increase rates when its Open Market Committee meets Tuesday.As one local broker quipped, "Why would the Fed take away the punch bowl just when the party's going strong?"

THE FEDERAL Reserve's Federal Open Market committee meets Tuesday to decide whether to boost interest rates for a third time this year. Last week a group of private and academic economists who call themselves the Shadow Open Market Committee, pointing to growth in the money supply, urged the Fed to raise rates further to head off inflation. But also last week, Federal Reserve Bank of San Francisco President Robert Parry said the central bank should be "more cautious" about raising interest rates because of the uncertainty of economic forecasts.