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| Home Front: Economy |
| Inflation Fear Likely to Boost Key Rate |
| 2004-11-07 |
| NEW YORK (AP) -- Stocks are surging, businesses appear to be hiring again, and a pro-business administration is about to start a second term in the White House. What could Wall Street possibly be worried about? Inflation. The Federal Reserve meets this week to discuss the economy and likely raise its benchmark interest rate by a quarter percentage point to 2 percent. The move is designed to make capital harder to come by, thus reducing prices and keeping inflation in check. Analysts added that even with the key interest rate rising, rates remain historically low and should not present too much difficulty for growing businesses. But inflation itself is another matter. This summer's economic "soft patch" - slow job growth, high energy prices and lackluster consumer spending - may be over, and some analysts believe the economy is ripe for inflation to take hold. (chart in link) |
| Posted by:Mark Espinola |