Most Rates Edge Higher on Nervousness That Fed May Tighten Credit Grip Soon
NEW YORK -- Most interest rates edged higher yesterday amid nervousness that the Federal Reserve System may tighten its credit clamp soon in an effort to keep the economy from overheating.</br></br>The economy's strong performance in January, coupled with rapid money-supply growth in recent months, has prompted many analysts to predict that the Fed will adopt a tougher credit stance, pushing up interest rates.</br></br>"There is a pretty strong consensus right now that the next move by the Fed will be a tightening move," said Edward J. Sawicz, a vice president and economist at Discount Corp. of New York, a securities firm.</br></br>Some analysts contend that the Fed may already be moving toward a more restrictive credit policy. "There is some possibility that the Fed may be tightening already," said Elliott Platt, a senior vice president and economist at Donaldson, Lufkin & Jenrette.</br></br>The interest rate on federal funds, which often provides clues to changes in Fed policy, has risen in recent days. Yesterday the rate hovered between 9 5/8% and 9 3/4%, up from an average of 9.6% in the week ended Wednesday. Federal funds are reserves that banks lend one another overnight.