Greenspan'in bugün yaptığı konuşma ve FED'in faiz arttırma konusu ile ilgili yorumlar:
Greenspan Says `Vigorous' Growth Hasn't Produced `Broad-Based' Inflation
April 21 (Bloomberg) -- The U.S. economy is in a ``vigorous expansion'' that has not yet produced ``broad-based'' inflation pressures, Federal Reserve Chairman Alan Greenspan said.
Faster growth has started to boost hiring, Greenspan told the ****t Economic Committee of Congress in Washington. Worker incomes have yet to rise and trigger higher prices, he added.
``As I have noted previously, the federal funds rate must rise at some point to prevent pressures on price inflation from eventually emerging,'' Greenspan said. ``As yet, the protracted period of monetary accommodation has not fostered an environment in which broad-based inflation pressures appear to be building.''
Greenspan's comments are laying the groundwork for an interest rate increase as soon as August, economists and investors said. His comments yesterday, repeated today, that deflation is no longer an issue had sent markets tumbling as investors bet the Fed would raise its benchmark overnight bank lending rate from 1 percent sooner than investors had expected.
``He's saying we're watching, we're waiting, and we haven't decided yet'' on when to raise rates, said Robert Hormats, vice chairman of Goldman Sachs International in New York.
The latest survey of the Fed's 12 regional banks showed that the economy had ``widespread'' growth from mid-February through April 12 with ``modest'' increases in overall prices. ``Economic activity increased across the nation,'' said the survey, known as the beige book for the color of its cover. ``Labor markets tightened somewhat with modest wage increases.''
The Fed will have to raise its target ``significantly at some point'' to head off inflation, Robert Parry, president of the Federal Reserve Bank of San Francisco in a speech in Gettysburg, Pennsylvania. Parry, 64, plans to retire in June.
The benchmark 10-year Treasury note due in February 2014 rose 3/16 point, pushing its yield down 3 basis points to 4.43 percent at 12:55 p.m. The Standard & Poor's 500 index rose 2.7 points, or 0.3 percent.
``This is a preparation for a rise in the federal funds rate without giving a specific timetable,'' said Roger Kubarych, a former Federal Reserve Board staff economist and now chief U.S. economist in the New York office of Hypovereinsbank.
``The door is now open for a change in monetary policy'' that may come as a quarter-point increase in August, said Lyle E. Gramley, a former Fed governor now a senior adviser at Schwab Soundview Capital Markets in Washington. The Federal Open Market Committee's policy statement at its May meeting ``will have a different tone.''
J.P. Morgan Chase & Co. moved its forecast for the next rate increase to August from November, economist Dean Maki said in a note to clients. Four consecutive increases of a quarter percentage point may bring the overnight rate to 2 percent by year- end, Maki said.
In general, a boost in the rate wouldn't mean more would necessarily follow, Greenspan said. ``There have been many occasions in which we made one move and stop,'' Greenspan said. ``When we go through protracted moves it is usually a year or so.''
The increasing pace of growth is pushing businesses to add employees, Greenspan said, adding that there is still ``anxiety'' among workers. Executives are replacing obsolete equipments and yet show ``unusual reluctance'' to buy machines for basic expansion, he said.
The economy created 308,000 jobs in March, the most in four years. A strong economy that leads to increased job creation would ease some of the pressure on President George W. Bush as he seeks re-election amid the loss of about 1.8 million jobs since he took office in January 2001.
``About 85,000 jobless individuals per week exhausted their unemployment insurance benefits'' in March, Greenspan said. He told the Committee that extending unemployment benefits would ``would be a good idea, because of the size of exhaustion.''
Central bankers are seeing early signs of faster inflation, Greenspan suggested. ``The pace of economic expansion, here and abroad, is evidently contributing to some price pressures at earlier stages of the production process and in energy markets, and the decline in the dollar's exchange rate has fostered a modest firming of core import prices,'' he said.
Over the past few weeks several companies have reported price increases. Toyota Motor Corp. raised prices on 10 U.S. car and truck models by an average $79 earlier this month. Georgia-Pacific Corp., which makes Brawny paper towels and Dixie cups, said April 2 it will raise prices by 6 percent to 9 percent July 1 on paper towels, tissues and napkins.
Steel Dynamics Inc., a Fort Wayne, Indiana-based maker of automotive and appliance steel, said last Thursday that it plans to raise its base price on structural steel by $50 a ton this quarter.
Fed officials have been saying in their most recent policy statements they can be ``patient'' before raising rates, a word Greenspan did not use in his testimony today.
Instead, he noted the Fed ``recognizes that sustained prosperity requires the maintenance of price stability and will act, as necessary, to ensure that outcome.''
The U.S. economy, which grew at a 6.1 percent annual pace in the second half of 2003, ``appears to have emerged around the middle of last year from an extended stretch of sub-par growth and entered a period of more vigorous expansion,'' he said.
Recent data show that ``that growth of activity has remained robust so far this year,'' Greenspan said. He cited increases in household spending, home sales and construction spending as contributors to growth. Retail sales rose 1.8 percent in March, the most in a year.
``Companies will ultimately find that they have no choice but to increase their workforces if they are to address growing backlogs of orders,'' Greenspan said. ``In such an environment, the pace of hiring should pick up on a more sustained basis, bringing with it larger, persistent increases in net employment than those prevailing until recently.''
Interest rates remain ``quite accommodative with short-term interest rates still close to zero,'' said Greenspan, 78, who has led the U.S. central bank since 1987. Tax cuts are ``likely to continue to provide considerable impetus'' to spending in the U.S. this year, he said.
While ``the caution among business executives that had previously led them to limit their capital expenditures appears to be giving way to a growing confidence in the durability of the expansion,'' Greenspan said there's still some hesitancy among companies.
``Although businesses are replacing obsolescent equipment at an accelerated pace, many managers continue to exhibit an unusual reluctance to anticipate and prepare for future orders by adding to their capital stock.''
President Bush would not complain if the strengthening economy led the Fed to raise rates, Commerce Secretary Donald Evans said in an interview last month.
``The president's got great confidence in the chairman,'' Evans said. ``He's done a masterful job with monetary policy.''
To contact the reporter on this story: Craig Torres in Washington
at [email protected]