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Wednesday, February 08, 2006

Greenspan Says Rates May Need to Rise Further

Greenspan's "private" dinner with clients of Lehman Brothers:

Greenspan, at Lehman Dinner, Suggests Rates May Rise, Bloomberg: ...Alan Greenspan suggested at a private dinner yesterday that short-term U.S. interest rates may need to rise further, a person briefed by a participant at the meeting said. ... Greenspan told about a dozen clients of Lehman Brothers Holdings Inc. in New York that low long-term rates were limiting the Fed's ability to manage the economy. Homeowners are borrowing more against the value of their homes to finance spending, the person said.

Greenspan went on to suggest that the Fed may need to raise short-term rates more to keep the economy from overheating... Greenspan told the Lehman clients the economy was doing well and in particular pointed to robust chain store and light vehicle sales... In his talk with the investors, Greenspan said he expects consumer spending to slow later in the year as the housing market cools and homeowners find it harder to borrow against their real estate, according to the person. ...

The former Fed chairman also told Lehman's customers that globalization had played a major role in driving inflation down .... That's holding down workers' wage demands in the U.S., helping to contain inflation even with higher energy prices...

    Posted by on Wednesday, February 8, 2006 at 02:17 PM in Economics, Monetary Policy | Permalink  TrackBack (0)  Comments (3)

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