Federal Reserve Policymakers Meet Today: Despite Some Calls to Raise ...
Federal Reserve policymakers, concerned about jittery financial markets, an unstable dollar, new inflationary pressures and conflicting evidence on the strength of the economy, will meet today to set a monetary course for coming weeks.</br></br>Some financial analysts expect the Fed to move soon to increase its 5*/2 percent discount rateÛÓthe interest rate it charges on loans to financial institutionsÛÓto show its determination to control inflation and to help prop up the dollar. How- ever, other analysts believe Fed officials will be too wary about hurting economic growth to raise the key rate unless another drop in the dollar forces their hand.</br></br>In a series of interviews earlier this month, several members of the policymaking group, the Federal Open Market Committee, or FOMC, indicated that they saw no need to make any major changes in policy.</br></br>Since FOMCÛªs last meeting in March, some longer-term interest rates have risen more than lÛ÷/i percentage points. Over the period the dollar fell sharply, sparking worries</br></br>among financial market participants of a surge in inflation and a tightening of monetary policy in response by the Fed. Yesterday the bond market initially fell, as it had on Friday, but rallied before the day was out. Analysts said the gain may have been due to a small rise in the value of the dollar and a decline in a closely watched commodity price index, which had been going up rapidly in recent weeks.