Doug Henwood wrote:
> [Berry is extremely well-connected, one of the Fed's prime leakees.
> So this counts as a virtual press release for official thought.]
>
> Analysis
> Fed Wonders: Where's the Rebound?
> Policymakers Worried by Economy's Unusual Resistance to Rate Cuts
>
> By John M. Berry
> Washington Post Staff Writer
> Thursday, June 21, 2001; Page A01
>
> As U.S. economic growth remains stubbornly sluggish, some Federal
> Reserve officials are growing increasingly concerned that unusual
> developments may be clogging the main channels through which lower
> interest rates normally stimulate the economy.
>
> After five half-percentage-point rate cuts this year -- the most
> aggressive such actions by the central bank in nearly 19 years --
> there is no sign yet of a rebound.
>
> Fed officials believe their policy actions will eventually be
> effective, but, because of a variety of factors, they can't be sure
> when. That makes it more difficult for them to decide whether, and by
> how much, to cut interest rates again when the central bank's top
> policymaking group, the Federal Open Market Committee (FOMC), meets
> next Tuesday and Wednesday.
>
> There's always a long lag between changes in interest rates and
> noticeable changes in the economy's behavior. For that reason, the
> impact of the first of the interest rate cuts this year, which came
> Jan. 3, ought to be just beginning to be felt.
>
> But some Fed officials are becoming increasingly concerned that any
> rebound in growth might not begin until next year and that it could
> start out weaker than many investors and analysts are expecting.
>
> That's because they see few signs that the economy is responding to
> interest rate cuts in traditional ways.
>
> [Rest at
> <http://www.washingtonpost.com/wp-dyn/articles/A20491-2001Jun19.html>.]
--
Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu