NewsMine — economy — united-states — 2003 — 2003-sept-oct — Viewing Item

Fed holds rates warns on deflation Original Source Link: (May no longer be active)    http://news.independent.co.uk/business/news/story.jsp?story=444175 http://news.independent.co.uk/business/news/story.jsp?story=444175 Fed holds rates and warns on deflation By Rupert Cornwell in Washington 17 September 2003 The Federal Reserve yesterday left US short-term interest rates at a 45-year low and indicated a rise in rates could still be some months off. It also renewed the warning that excessively low inflation (i.e. deflation) was on balance the biggest worry over the future course of the economy. The widely expected outcome of this latest meeting of the policy-making Federal Open Market Committee leaves the central bank's target federal funds rate for overnight money at 1 per cent, its lowest level since 1958. Economists generally believe the next move in rates will be upward. But in the closely watched statement accompanying the rates decision the FOMC made clear its neutral bias may continue for some while, despite signs that US economic growth is picking up. It said the upside and downside risks were "roughly equal", but the predominant factor was "the risk of an unacceptably low rate of inflation". In addition, the committee noted, "while spending is firming, the labour market has been weakening". Though the economy is expected to grow at a fairly robust 3.5 per cent or more for the rest of the year, the recovery is not creating new jobs. Manufacturing shed a further 93,000 jobs in August, even though the headline unemployment rate edged down from 6.2 per cent to 6.1 per cent. Along with Iraq, the economy is the biggest threat to President George Bush's re-election next year. Since he entered the White House in January 2001, almost 3 million jobs have been lost. He thus risks running for re-election as the first US president since Herbert Hoover to have seen a net loss of jobs during his term of office. The trend reflects not only a stagnant economy, but sharply rising productivity and the transfer of US manufacturing to low-wage producers such as China. © 2003 Independent Digital (UK) Ltd

2 years in a row more in poverty Asian debt withdrawal threat to us deficit { September 7 2003 } Asian unpegging crucify us { October 3 2003 } Bush bid weaken dollar against asia { September 24 2003 } Bush cuts schools highways { September 10 2003 } Bush priorities under scrutiny Bush takes credit economic upturn { September 1 2003 } China brings us export resictions into trade debate Deficit not manageable { September 18 2003 } Deflation still worries federal reserve { September 17 2003 } Deflation will continue for years { September 10 2003 } Disappointed earnings bonds rally Dollar gains on euro { September 2 2003 } Dollar over valued { September 18 2003 } Dollar plunges 3 year low Dollar tumbles low against euro { October 8 2003 } Economy expands fastest since 1984 no jobs { October 31 2003 } Fed holds rates warns on deflation Firms dont buy rebound Firms still slashing jobs Foreign investors fear weak dollar { September 22 2003 } Gold hits 7 year high { September 25 2003 } Gold records as tumbling dollar { September 10 2003 } Government claims unemployment stabilizing { October 3 2003 } Grocery workers 3rd day strike san diego { October 14 2003 } Job loss like great depression Jobless claims lowest eight months { October 9 2003 } La transit strike may strand 500 thousand { October 14 2003 } Mass august layoffs { September 26 2003 } Monthly costs iraq approach vietnam Poor gained 1 3m in 2002 { September 3 2003 } States risk big losses bond funding pensions { October 12 2003 } Stocks at 14 month high { September 2 2003 } Stocks fall economy worries { September 30 2003 } Stocks lower after production data Stocks rebound hopes intact { October 1 2003 } Stocks rise on upbeat analyst reports { September 8 2003 } Stocks slip bonds rise Trade gap bring down dollar warns imf { September 19 2003 } Trade gap could bring down dollar { September 19 2003 } Uninsured increases 2 4 million last year { September 30 2003 } Us bonds face gloomier future as selling continues { September 7 2003 } Us closes last levis manufacturer { September 26 2003 } Us losing millions manufacturing jobs { September 4 2003 } Weak dollar raises stocks Files Listed: 45

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