Tracking the Economy
The Federal Open Market Committee meets tomorrow to plot the short-term course of interest rates. The pace of the economic recovery is at stake, says Robert Chandross, chief economist at Lloyds Bank in New York.</br></br>With the federal budget deficit frustrating attempts to stimulate the economy fiscally, "monetary policy is the only game in town," Mr. Chandross says. He contends that a cut in the Fed's discount rate to 4.5% from 5% would reduce the prime rate at banks as well as some credit-card rates, inviting holiday season sales.</br></br>Auto manufacturers and dealers could use some cheer. David Garrity, auto analyst at the Nomura Research Institute in New York, forecasts a small rise in late-October car sales to a 6.4 million-unit annual rate. A moderate pickup in rental fleet sales is expected to mask weak consumer demand for cars.</br></br>Mr. Garrity notes that for now, Detroit plans to produce 4.2% more passenger cars this quarter than it did in the fourth quarter of 1990. That would augur more auto sector jobs, he says, "but the crux of the matter is that if sales don't materialize, production schedules are subject to downward revision."</br></br>Statistics to Be Released This Week