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 user 2003-12-15 at 9:47:00 am Views: 47
  • #4240

    Near rock-bottom borrowing costs probably will stick around well into 2004, but Federal Reserve policy- makers may start to nudge them up in the summer as the economy continues its recovery, economists say.

    In their final meeting of the year, Fed Chairman Alan Greenspan and his colleagues offered their most upbeat assessment of the economy in recent months. The economy is “expanding briskly and the labor market appears to be improving modestly,” said Fed policy-makers as they decided to hold a key short- term interest rate at a 45-year low of 1 percent.

    Economic growth they indicated had grown at a 8.2 percent rate in the July-September quarter, the fastest pace in nearly two decades. Analysts predicted the economy will slow but still post a healthy growth rate of around 4 percent in the current quarter.

    In another encouraging note, Fed policy-makers said the dangerous prospect that inflation could move lower was less of a concern now than it has been. Although opinions seemed to be mixed among Fed- watchers and economists regarding when the Fed may start to adjust interest rates upward, with most predicting that a move in that direction is unlikely until late in ’04.