OF1-11/05/09 6:25 AM
STEERING A FRAGILE AND PUZZLING ECONOMY.
The Osgood File. I'm Charles Osgood.
At a meeting of its Open Market Committee yesterday, the Fed decided to keep its key interest rate at current record lows for an "extended period."
This, despite the fact that economic activity is continuing to struggle to its feet, the housing market is showing signs of life, and the government has been pouring dollars by the trillions into the money supply.
The Fed is saying that raising interest rates anytime soon would be like stepping on the brake with one foot, while pushing hard on the accelerator with the other. Tricky business, economists say.
SOT - Julia Coronado, economist with BNP Paribas
"It's extremely tricky. I mean, we haven't been here before --- both in terms of the financial crisis, in terms of the policies they're engaged in..."
Everything the Fed does has consequences --- and they know it, says CBS News Business Reporter Alexis Christoforous.
SOT - Alexis Christoforous, CBS News Business Reporter
"I think the Fed was very careful not to be too enthusiastic about the future of the economy. And the Fed is concerned that any hint of a rate hike would prompt investors to sell Treasury bonds. That could send rates on consumer and businesses' loans higher, and that would endanger our recovery."
Aren't they worried about inflation?
SOT - Prof. Peter Sperling, an economist at Touro College
"There's so much slack in the economy that there really is no particular danger from inflation becoming a problem right now."
Economist Peter Sperling of Touro College.
SOT - Prof. Peter Sperling
"What you want is to make it easier for consumers to spend on new homes, new cars, new refrigerators, stoves, appliances, and so on."
And, for employers to start hiring again.
Tom DiBenedetto had 11 employees in his building contractor business in Nyack, New York. Now, he's down to two --- and would love to start hiring again.
SOT - Tom DiBenedetto
"But I don't wanna commit to hiring somebody and hire them --- and then all of a sudden, a couple of months down the line, not have work for them."
The economy is a puzzle, says Anthony Mason.
SOT - Anthony Mason, CBS News Business Correspondent
"Fed Chairman Ben Bernanke's facing some critical decisions in the coming months, as he tries to solve this Rubik's Cube of an economy..."
The Osgood File. Charles Osgood on the CBS Radio Network.
The Osgood File. November 5th, 2009. |
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