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Article: Economics 101.(American interest rates)(Brief Article)
- Article from:
- The Economist (US)
- Article date:
- August 28, 1999
CopyrightCOPYRIGHT 1999 Economist Newspaper Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The Fed has been too slow and cautious in raising American interest rates
"IF I seem unduly clear to you, you must have misunderstood what I said," Alan Greenspan, chairman of America's Federal Reserve, once told a congressman. Wall Street, however, finds the Fed's message clear enough. The stockmarket shrugged off the Fed's quarter-point increase in interest rates, to 5.25%, on August 24th--just as it had the Fed's previous rate rise two months ago. By increasing interest rates so timidly, the Fed is allowing investors to believe that each rate rise may be the last. This belief is dangerously misplaced.
America's economic expansion is now 101 months ...