Fed Board Wavers On Interest Rate Cuts
Federal Reserve policy makers agreed last week to cut short-term interest rates slightly in response to a budget agreement, but they balked at commiting themselves now to another cut to counteract any further deterioration in the economy, according to well-informed sources.</br></br>The caution withinby the Federal Open Market Committee (FOMC), the central bank's secretive top policymaking body, not only underscored a deep concern about a stubborn inflation rate but also reflected basic doubts about how effective the Fed can be in reversing the current economic slowdown by reducing interest rates.</br></br>The Bush administration, its own hands tied by the budget deficit, has been calling on the Fed to cut interest rates to avoid further economic damage.</br></br>Two days after the $500 billion federal budget deficit package was reached last week, the members of the FOMC agreed tliat the measures should trigger a cut of a quarter of a percentage point in short-term rates as soon as it became law, according to the sources.</br></br>Although there are growing signs of weakness in the U.S. economy, the FOMC did not go along with a suggestion by Fed Chairman Alan Greenspan that it also ap-See RATES, A18,CoU