White House: Lower Interest Rates; Administration Urges Fed to Act to Halt Economy's Slowdown
The White House yesterday called on the Federal Reserve to lower interest rates, even though it publicly maintained the economy is in good shape and that it was not trying to tell central bank officials what to do.</br></br>The unusual comments by presidential spokesman Marlin Fitzwater came after a meeting of senior White House staff at which Michael Boskin, chairman of the Council of Economic Advisers, and Richard Darman, director of the Office of Management and Budget, expressed concern about the way in which economic growth has slowed and about the reluctance of the Fed to cut interest rates more deeply, Bush administration sources said.</br></br>Also contributing to the critical comments by Fitzwater were an article in yesterday's Wall Street Journal that reported that key Fed officials who earlier had been pushing their colleagues to lower interest rates may no longer be doing so, and the news that housing starts fell sharply last month while December inflation was slightly lower than expected.</br></br>"We're hopeful that {Fed officials} will take a look at this morning's indicators and understand that these numbers are low and indicate that inflation has remained very steady over the last seven or eight years, and that lower interest rates are justified," Fitzwater told reporters.</br></br>The Labor Department said yesterday that consumer prices rose 0.4 percent in December, the same increase as the month before. That put the consumer price index 4.6 percent higher than it was in December 1988, only a slightly larger rise than the 4.4 percent figures for 1987 and 1988 but nevertheless the highest rate in eight years.