- The Washington Times - Wednesday, February 2, 2000

Alan Greenspan's nomination to a fourth term as chairman of the Federal Reserve was approved by the Senate Banking Committee yesterday as the central bank began a two-day meeting that is widely expected to raise interest rates.
The committee approved Mr. Greenspan on a voice vote with no discussion and sent the nomination to the full Senate. During his confirmation hearing last week, he was widely praised by Sen. Phil Gramm, Texas Republican, and other members of the committee for his handling of monetary policy over the past 12 years.
President Clinton's nomination of Mr. Greenspan is expected to win quick approval in the Senate later this week. Senate Majority Leader Trent Lott, Mississippi Republican, indicated that the nomination would likely be taken up by the full Senate tomorrow.
Mr. Greenspan is widely credited for helping fuel the record-breaking expansion, which entered its 107th month yesterday.
He and the rest of the Fed's Open Market Committee began meeting yesterday to decide whether or not to raise interest rates in an effort to control inflation and keep the record expansion alive.
Leading Wall Street firms unanimously predict the Fed will increase the 5.5 percent federal funds on overnight bank lending to 5.75 percent. Some expect a similar-sized hike in the 5.0 percent discount rate on direct Fed lending to banks.
An announcement is expected after the conclusion of the second day of the meeting this afternoon.
Many Fed-watchers are bracing for a series of increases in coming months aimed at slowing growth and some say a fairly aggressive tightening of credit could be in store.
The Fed has "no choice but to keep tightening until they are able to cool off the American economy," former Fed governor Lawrence Lindsey said yesterday.
"Whether the Fed is there or not, the price of money is going up because there's lots of demand for it around this planet," Mr. Lindsey, who is now the top economic adviser to Republican presidential hopeful Gov. George W. Bush of Texas, told the National Association of Wholesale Distributors. "It's going to be a very hard year."
The Fed has conceded its three interest-rate increases last year have not brought economic growth to a pace that can be sustained without danger of inflation. It last raised rates by a quarter-percentage point Nov. 16.
Central bankers are concerned robust consumer demand is overtaxing a dwindling supply of available workers.
With unemployment at a three-decade low, central bankers fear that producers or service providers may not be able to keep pace with such strong demand if they cannot find enough workers and that this could drive up wages and prices.
The meeting lasts two days instead of the usual one-day affair, because the Open Market Committee spends the first day helping Mr. Greenspan prepare for his testimony to Congress on the state of the economy, scheduled for Feb. 17.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide