South-Westerns' Economic News Summaries
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EconNews Online is South-Western's service to provide summaries of the latest economics news stories. Review the brief summaries and, for stories of interest, select the full summary.
MONETARY POLICY 
Title  Brief Summary 
It’s Ok to Borrow from the Fed
Full Summary
The Federal Reserve has three primary tools of monetary policy but two of them are seldom used. Last week four major banks borrowed money from the Fed’s discount window, indicating that maybe it was ok to borrow from the Fed. In the past this action would have been interpreted as a sign of weakness for the bank that borrowed.

(Updated September, 2007)
Steady There, Mr. Bernanke
Full Summary
After much speculation and market jitters, the Federal Reserve policy makers have held interest rates steady. After 17 consecutive increases at each meeting since June 2004, the FOMC voted to hold interest rates at the current level.

(Updated September, 2007)
Fed is Sticking to the Groove
Full Summary
The economy is expected to continue a slow growth rate and inflation is in the acceptable range for the Federal Reserve. Fed chairman Ben S. Bernanke hinted lately that the central bank was comfortable with interest rates under the existing monetary policy. Bernanke says he expects the economy to weather the storm brought on by the housing market. The statement has brought most analysts to lose their optimism for a rate cut this year.

(Updated August, 2007)
Rates Steady Again
Full Summary
The economy experienced a one year anniversary on steady interest rates as the Fed left interest rates unchanged. They based their decision on acceptable interest rates measures, but continued to say that inflation was still a major worry.

(Updated July, 2007)
Threat of Inflation Remains Uncertain
Full Summary
Economic analysts listen closely to what the Federal Reserve is saying about economic conditions. Recent statements by the Fed leave a bit of uncertainty as to which way the economy may be going. Should the threat of inflation become severe enough, the Fed will move to increase interest rates further.

(Updated May, 2007)
When the Fed Speaks, People Listen
Full Summary
With an economy that seems to give one signal one month and a different signal the next, analysts and forecasters would like to have some hint as to how the Fed will respond. Consequently, they listen closely to what the Federal Reserve is saying about economic conditions. With a primary focus on inflation, the Feds statements are looked at as a signal for which way the economy may be going.

(Updated April, 2007)
Bernanke Comfortable With Interest Rates
Full Summary
The Chairman of the Federal Reserve, Ben S. Bernanke, gave an upbeat view of the economy when he reported to Congress recently. The Fed is predicting that unemployment will remain low over the next two years and inflation will decline slightly.

(Updated March, 2007)
Fiscal Policy and the Fed
Full Summary
In a recent statement on Social Security and Medicare, Fed Chairman Ben S. Bernanke warned congressmen that complacency over the federal deficit could lead to difficult economic times. His basic premise was simple, the longer we wait the more severe the efforts needed to correct the problem.

(Updated February, 2007)
Steady There, Mr. Bernanke
Full Summary
After much speculation and market jitters, the Federal Reserve policy makers have held interest rates steady. After 17 consecutive increases at each meeting since June 2004, the FOMC voted to hold interest rates at the current level.

(Updated September, 2006)
The Battle May Be Over, But Only Time Will Tell Whether the War is Won
Full Summary
After months of speculation about inflation, analysts now have a clear signal that the battle against inflation may be over. Federal Reserve Chairman Ben S. Bernanke's recent forecast indicates somewhat slower economic growth, a slight increase in unemployment and a broad-based cooling in the housing market.

(Updated August, 2006)
FOMC on the horns of a dilemma
Full Summary
Two age-old economic issues currently compete for the Federal Reserve's attention. As economic growth slows and inflation rises, the Fed rests on the horns of a dilemma. The Fed's analysis of just how seriously each issue affects the U.S. economy will weigh heavily on their next decision whether to increase, decrease, or take no action on interest rates.

(Updated July, 2006)
We May Have a New Wizard, but Still, Nobody Gets in to See the Wizard-Not Nobody-Not Nohow
Full Summary
After a period of increasing transparency in the Federal Reserve's monetary policy tools used to influence the economy, its actions may become less transparent. According to the minutes of Alan Greenspan's last meeting with the Fed's Open Market Committee, future moves by the Fed may be less predictable.

(Updated March, 2006)
New Fed Chief Brief but Clear
Full Summary
The new Fed chairman gave short but clear answers when he testified before Congress for the first time since taking the reins from Alan Greenspan. Ben S. Bernanke replaced long-standing Fed Chairman Alan Greenspan and all indications are that he will be his own man.

(Updated March, 2006)
Fed May Stop Hiking Interest Rates
Full Summary
After eighteen months of gradually increasing interest rates, the Federal Reserve has sent a signal that the increases may stop. According to minutes released from the December Federal Open Market Committee, monetary officials agreed that they are nearing the end of a period of gradually increasing rates to ward off inflationary pressures.

(Updated February, 2006)
Natural Disasters and the Fed
Full Summary
The Federal Reserve does not think that the myriad hurricanes that have hit Florida last year, with the larger and more destructive Katrina and Rita storms this year will pose “persistent threats” to the U.S. economy. Consequently, Fed officials have increased short-term interest rates for the 11th time in a row, and have indicated that more increases are on the way.

(Updated October, 2005)
Federal Funds Rate Will Continue to Rise
Full Summary
Federal Reserve Chairman Alan Greenspan has indicated that the Fed will stick to its intention to gradually raise the benchmark short-term interest rate in the near future. This pronouncement indicates that the Fed continues to worry more about inflation than about slower economic growth.

(Updated September, 2005)
Tight Money Policy Continues
Full Summary
Once again, the Federal Reserve raised its benchmark short-term interest rates by a quarter of a point. This brings the rate to 3.25 percent and there is no indication the trend will end soon as the Fed continues to worry about inflation.

(Updated August, 2005)
Interest Rates Nudge Upward
Full Summary
The Federal Reserve once again raised its benchmark short-term interest rates by a quarter of a point. This brings the rate to 3 percent and signals that the Fed continues to worry more about inflation than it worries about slow economic growth.

(Updated July, 2005)
The Housing Bubble and the Fed
Full Summary
Many analysts express concern that a "housing bubble" is developing in the U.S. and, given rising interest rates, the bubble may soon burst. The growing real estate bubble will likely keep the Fed right on track with incrementally increasing interest rates.

(Updated June, 2005)
Higher Rates in the Future
Full Summary
Even in light of some new evidence that economic growth has slowed, the Federal Reserve appears to be on track to raise short-term interest rates in the near future. The Fed's recent terminology, and apparently for the future, continues to refer to raising rates at a "measured pace" to ward off inflation.

(Updated March, 2005)
Will the Fed Move Faster on Short-term Rates?
Full Summary
The Federal Reserve continues a policy of changing short-term interest rates at a "measured pace." Once again in December, the Fed raised the federal funds rate by a quarter point to 2.25 percent. However, some see indications that Alan Greenspan and the Fed will be forced to move at a faster pace.

(Updated February, 2005)
Real Federal Funds Rate Approaches Zero
Full Summary
In its most recent interest rate actions, the Federal Reserve has continued an "accommodative" monetary policy. The Fed says it intends to conduct policy that results in the "upside" risk of inflation being roughly equal to the "downside" risk of slower growth.

(Updated February, 2005)
Fed Continues to Fight Inflation 
Full Summary
For the fourth time this year, the Federal Reserve has increased short-term interest rates. The Fed moved to raise the federal funds rate by a quarter of a point, to 2 percent. This Fed action suggests that they intend to stick with their plan to increase interest rates gradually to contain inflationary pressures in the economy.

(Updated January, 2005)
Half Full or Half Empty? 
Full Summary
The Federal Reserve has raised short-term interest rates again, in keeping with an early promise to gradually increase the cost of borrowing. The move was no surprise to most analysts.

(Updated November, 2004)
Let the "Jawboning" Begin 
Full Summary
The Federal Reserve recently raised its benchmark interest rate for the first time in four years, signaling its recognition of inflationary pressure in the economy. The political reaction to the Fed's decision, in this election year, can be labeled "cautious" at best.

(Updated September, 2004)
Are We Playing Catch-up? 
Full Summary
Some critics of Fed Chairman Greenspan and recent Fed policy suggest that its actions are too little too late. They argue that inflation has already established a foothold in the American economy and the policy of slowly increasing interest rates may not be sufficient to ward off impending inflation.

(Updated September, 2004)
Will the Fed Move Aggressively? 
Full Summary
Recent economic data suggest that inflation may be a more serious threat to the U.S. economy than Federal Reserve policy makers expect. Should this be the case, the Fed stands ready to step in with monetary policies to stave off potential inflation.

(Updated August, 2004)
How Near Is Inflation? 
Full Summary
Talk continues about whether or not the Federal Reserve will raise interest rates in the near future. The Fed will likely act to raise interest rates because of increasing inflationary pressure in the economy. Some signs to look for include rapid increases in hiring and the trend for consumer prices.

(Updated August, 2004)
Fed to Move at "Measured" Pace 
Full Summary
The Federal Reserve has maintained interest rates at 1 percent, but has also indicated a willingness to move toward higher rates when conditions warrant. The Fed has been reluctant to increase interest rates during a presidential campaign, but Alan Greenspan has made it apparent that he would be willing to do so if the economy starts to heat up too quickly.

(Updated July, 2004)
Chinese Inflation 
Full Summary
Chinese officials are worried that their economy may be overheating, as investment spending has increased rapidly. In response, the central bank of China has engaged in a tight money policy aimed at slowing down the overheating economy.

(Updated June, 2004)

When Will Interest Rates Rise?
Full Summary

Traditionally, Federal Reserve Chairman Alan Greenspan has sought unanimity among Fed officials in terms of monetary policy positions. But in separate speeches, two Federal Reserve officials have offered conflicting views on the expected path of inflation and the risks of keeping interest rates too low. This appears to be a break in the otherwise consistent stance of the Fed to keep interest rates low because of the low level of inflation and the concerns associated with deflation and the lack of job growth.
(Updated April 7, 2004

Interest Rates Remain Unchanged
Full Summary

Concerns about the weak job market have led the Federal Reserve to leave short-term interest rates unchanged. The action was not surprising to most analysts, who expect the Fed to refrain from increasing interest rates until much later in the year.
(Updated April 7, 2004

Are Low Interest Rates About to End?
Full Summary

Federal Reserve Chairman Alan Greenspan has hinted that the low interest rates experienced by the U.S. economy in recent years may be ending. Recognizing the strong economic growth of recent months and the slowly improving employment picture, Greenspan suggested that the time might be near for higher interest rates.
(Updated January 4, 2004

Will the Fed Raise Rates

Full Summary
Given the recent job report indicating that U.S. payrolls grew in September, historical precedent would suggest that the Fed might return to a monetary policy protecting against inflation. Many economists are not so sure, and say that the job data could position the Fed to hold off on interest rates even longer.
(Updated October 7, 2003

How Big the Tax Cut?

Full Summary
President Bush has requested a tax cut of $726 billion over the next ten years. In this highly partisan issue, it appears that the actual tax cut is more likely to be in the area of $350 billion. With an election year nearing, the political climate for a tax cut is favorable, but the final size of the cut and associated reduction in spending is still up for debate. The areas of reducing taxes on dividends and capital gains, a high priority for President Bush, have been highly contested.
(Updated June 2, 2003

Inciting Inflation

Full Summary
Japan's central bank has kept short-term interest rates at zero for almost four years, without initiating the hoped-for stimulus. In reaction to falling prices, climbing budget deficits, a declining yen and a tightening of business and consumer spending, there is a push to try inflation.
(Updated April 4, 2003

On a Par

Full Summary
During this past year, the dollar has depreciated about 12 percent relative to the euro and many analysts predict the dollar will fall further, perhaps to $1.10, by the end of 2003.
(Updated January 2, 2003

Big Bank Bailout

Full Summary
Many Japanese officials feared that the banking industry might collapse and throw the economy into turmoil. To prevent this potential disaster, the Bank of Japan announced a plan to purchase stocks from banks, a solution that will require legislative change.
(Updated October 10, 2002

The Negative Side of Interest Rates

Full Summary
Interest rates in Japan are very close to zero. Yet, with continuing deflation and the threat of a banking crisis the Central Bank of Japan is considering lowering interest rates still further, to below zero.
(Updated September 1, 2002

Open, Says the Fed

Full Summary
Commercial banks can occasionally find themselves short of reserves, so the Fed is proposing a change in the way that it loans reserves to member banks - to allow greater access to loans in exchange for higher interest charges.
(Updated June 1, 2002

Fed Says
Hold-Em

Full Summary
The FOMC voted to hold interest rates at present levels at their March meeting, noting a recovery is well underway and further interest rate cuts are unlikely.
(Updated May 1, 2002
It Was Supposed to Float - Not Sink!
Full Summary
The value of Argentina's national currency, the peso, plummeted,throwing the country into a deeper financial crisis. Argentine President Eduardo Duhalde is losing popular support and unless he can stop the peso's fall, his ability to govern is questionable.
(Updated May 1, 2002
Salvation Takes More Than a Floating Peso
Full Summary
Argentina is hoping that a devaluation of the peso will promote export growth and provide sufficient stimulus to end Argentina's four-year recession. Analysts believe that even if supporting measures are adopted, improvements in the Argentine economy will take years, not months to accomplish.
(Updated March 20, 2002
The Economy Rates a 10
Full Summary
In the face of a faltering economy with surging joblessness and slumping consumer confidence, the Federal Reserve cut the federal funds rate by one-half percent in an effort to inject some strength into the economy.
(Updated December 1, 2001
A Resistant Strain of Weakness
Full Summary
The Fed cut its benchmark federal funds interest rate from 3 percent to 2.5 percent, the lowest level in 39 years. Interest rate cuts are supposed to induce business and consumers to increase spending; but business borrowing has virtually ceased and consumer-credit growth has slowed sharply.
(Updated November 1, 2001
The Too Strong Dollar?
Full Summary
After years of assuming that a strong dollar was good for the U.S. economy, many economists are calling for the Bush Administration to reexamine its policy, arguing that the current strength of the dollar is hurting exporters.
(Updated September 1, 2001
The Rebound Cometh?
Full Summary
The Federal Reserve has cut interest rates by a total of five and three-quarter points since the start of 2001, but the economy has not responded to these rate cuts, and Fed officials to wonder if additional rate cuts are needed.
(Updated August 1, 2001
Dissension in the Ranks
Full Summary
A Fed governor with a reputation of being extremely rigid when it comes to fighting inflation, has been engaged in a debate with Alan Greenspan over monetary policy and its relation to economic growth and inflation.
(Updated July 1, 2001
Monday-Morning Quarterbacking
Full Summary
The economic expansion continued for record lengths, but over the past year the Fed tried to slow the economy's growth by enacting a number of interest rate hikes, and economic growth fell sharply and suddenly.
(Updated May 1, 2001
Pumping Yen
Full Summary
Japan's policy makers are struggling to revive a stagnant economy¾consumer and business spending has decreased in recent months because of a lack of confidence in their economic future. As a consequence, prices have fallen and so has the value of assets.
(Updated May 1, 2001
The Fear Up North Is That Their Economy Is Heading South 
Full Summary
Fears that the U.S. economy is slowing bring fears that Canada's economy will follow. These worries caused the Canadian central bank to reduce its short-term interest rates by one-half percent to try to stimulate domestic demand.
(Updated April 1, 2001
Economic Evolution or the Greenspan Effect? 
Full Summary
Alan Greenspan is believed to single-handedly control U.S. monetary policy and thereby the U.S. economy. The task of managing the U.S. economy depends importantly on the underlying volatility of output, which decreased starting with the first quarter of 1984, before Greenspan's first appointment to the Fed in 1987.
(Updated February 1, 2001
Hard Landing Ahead 
Full Summary
There is a mounting body of evidence that the economy is slowing. Stephen Roach, chief economist at Morgan Stanley Dean Witter, argues that the economy has stalled and that another shock, perhaps in the form of another decline in the stock market, could bring a recession both here and abroad.
(Updated January 1, 2001
Uncertainty Abounds 
Full Summary
Over the past year, a soft landing had seemed to be the most probable outcome following predictable declines in employment growth and the stock market. But events in recent weeks indicate that the "landing" may not be so soft.
(Updated December 1, 2000
Dollar Dilemma 
Full Summary 
A strong dollar was supposed to be good for the American economy, and the inflow of foreign capital into the U.S. has supported productivity improvements and increased profitability of American firms. Economists are now having second thoughts about these benefits.
(Updated December 1, 2000
Interest Rates in Japan a Zero
Full Summary
Interest rates in Japan have been almost zero since February 1999, a policy adopted as an emergency measure to assist Japan's ailing economy. It was expected to only be a temporary measure, but policymakers at Japan's central bank have just voted to keep interest rates at their current level.
(Updated August 1, 2000)
May's Labor Data Means?
Full Summary
Economic data is being carefully monitored for signs that the Federal Reserve's six interest rate hikes over the last year have slowed the economy. Early signs of a slowdown were reports that car and home sales have dipped, construction spending is off and manufacturing output decreased.
(Updated July 1, 2000)
Stepping Up Rates?
Full Summary
The Fed may change its policy of gradually raising interest rates in an effort to reign in the economy. The emerging signs of inflation suggest that this gentle nudging is not working and a more aggressive approach is needed.
(Updated June 1, 2000)
Number 6
Full Summary
In a continued effort to slow the economy, in May the Fed raised short-term interest rates by one-half percent. Looking ahead to its June meeting, the Fed's monetary policy committee said the economy's "risks are weighted mainly toward conditions that may generate heightened inflation pressures in the foreseeable future."
(Updated June 1, 2000)
Maybe It's Contagious?
Full Summary
A week after the Federal Reserve Bank raised U. S. interest rates, the European Central Bank, the Bank of England and South Korea all raised their interest rates as a result of central banks becoming worried about inflationary pressures in their economies.
(Updated March 1, 2000)
Rising Rates
Full Summary
With economic growth surging at nearly 6 percent in the second half of 1999, Federal Reserve policymakers raised rates for the fourth time in the last 6 months to cool off the economy and prevent inflation. Consumers and businesses will face higher borrowing costs for everything ranging from credit card purchases to mortgages.
(Updated March 1, 2000)
Y2K$
Full Summary
The fear of Y2K mishaps resulted in billions of dollars being spent on computer programming fixes. Many people had to work on New Year's Eve as a precaution. People stocked up on water, food, gasoline, but apparently not on cash.
(Updated February 1, 2000)
For the Fed, Once Is Not Enough
Full Summary
Responding to the significant decline in the unemployment rate, the Fed raised short-term interest rates by one-quarter percent to 5.5 percent. The Fed expects that the increase will ease economic growth and reduce the demand for labor, as reductions in sales will cause businesses to cut production.
(Updated January 1, 2000)
Wealth and Worry
Full Summary
The impact of an increase in interest rates on aggregate consumption is negative¾consumers generally reduce their purchases of durable goods, like automobiles and homes that are financed over time. For more and more individuals, rising interest rates can affect consumption through change in wealth.
(Updated December 1, 1999)
Rates Happen
Full Summary
At the September FOMC meeting, the Fed decided to leave interest rates unchanged and most investors probably heaved a sigh of relief. However, looking at the yield on United States Treasuries since that time, it is obvious that yields have been increasing.
(Updated November 1, 1999)
The Economy Rocks to Fed Rate Rolls
Full Summary
The Fed's recent decision to raise short-term interest rates will have widespread impact on the U. S. economy. Banks will likely increase their prime lending rates, which will change home equity, credit-card and small business loan rates that are tied to the prime rate….
(Updated August 1, 1999)
Much Ado About Interest Rates
Full Summary
For many months the question of whether the Fed was going to raise interest rates has been in the news. The economy has been growing at a rate that in the past would have caused inflation to accelerate, but inflation reports showed only minor changes.
(Updated July 1, 1999)
Fed Holding Steady
Full Summary
After raising interest rates three times since September, the Federal Reserve decided at this month's meeting to leave interest rates unchanged.
(Updated January 1, 1999)
A Cutting Problem
Full Summary
When the Federal Reserve holds its monthly meeting to determine whether current economic conditions require a revision of the Fed's monetary policy, there will no doubt be debate over whether the Fed should cut interest rates again or simply hold the line.
(Updated December 1, 1998)
If At First You Don't Succeed
Full Summary
In a surprise move, the Federal Reserve--acting outside of one of its regularly scheduled policy sessions--cut interest rates by one-quarter of one percent. The Fed's action was in response to growling concern that the unsettled conditions in financial markets will restrain aggregate demand in the future.
(Updated November 11, 1998)
Interest Rates Head South
Full Summary
After months of speculating whether the Federal Reserve was going to raise interest rates, the global financial crisis and its theorized effect on U.S. growth, caused the Fed in rapid sequence to first consider, and then implement, a decrease in the Federal funds rate by one-quarter of one percent.
(Updated October 15, 1998)
A Delicate Balance
Full Summary
The Fed's Open Market Committee met and again held interest rates in check, but this time the motivation for their action was to try to balance the needs of a domestic economy displaying strength and an increasingly fragile global financial market.
(Updated September 1, 1998)
To Raise or Not 
Full Summary
When is the inflation coming? The economy is growing at a rate that in the past would have caused much anxiety on the part of the Federal Reserve. Inflationary pressures are building and many question the Fed's decision to hold interest rates steady.
(Updated May 22, 1998)
Money Matters  
Full Summary
The now muddied relationship between money and growth has caused the Fed to announce their monetary objectives in benchmark ranges rather than as a specific target.
(Updated May 19, 1998)
A Thing of the Past?  
Full Summary 
Most economists would sign up to the statement that all economic expansions must end. The question is when. The average economic expansion in the post World War II era lasts about 54 months. Our current expansion, which began in 1991, is now 78 months old. Although this expansion is still not near the record of 106 months set in 1961-69, it has caused some to argue that recessions may be a thing of the past.
(Updated January 15, 1998)
Evaluating the New Economics  
Full Summary 
If we were to grade our current macroeconomic performance, the grade would have to be an "A." Inflation is low, the unemployment rate is close to a 25 year low, profits are rising, and the stock market has experienced the longest bull market on record. This raises the question as to whether current macroeconomic theory with its assumed underlying relationships between unemployment, growth, and inflation are still reliable or even valid.
(Updated January 15, 1998)
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