Fed Officials Deny Money Policy Tightened
The recent surge in interest rates is not the result of any tightening of Federal Reserve monetary policy, according to senior Fed officials.</br></br>"We didn't stir this up deliberately," one senior official said yesterday, indicating there has been no Fed action to make cash less readily available to the nation's banking system.</br></br>Instead, the official said, financial markets are "having a minicrisis of confidence" brought on by the persistent weakness of the dollar in foreign exchange markets, which has revived fears of higher inflation in the future. The dollar's weakness in turn is related to the continuing large federal budget deficit and the U.S. trade deficit, he said.</br></br>Meanwhile, Fed Governor H. Robert Heller said yesterday weak economic growth in other major industrial nations makes it inappropriate for the Federal Reserve to raise interest rates.</br></br>In an interview with Dow Jones, Heller said there is "little or no growth" occurring in Japan and West Germany. "For us to raise interest rates in that situation would not be very appropriate," he said.