26 October 2001, 09:49  Fed's Moskow: Inflation Not Immediate Concern

CHICAGO -(Dow Jones)- The president of the Federal Reserve Bank of Chicago questioned Thursday the significance of September's economic data, given the tremendous shock the terrorist attacks had on the country. Answering questions from reporters following a speech to the Bankers' Association For Finance and Trade, Michael Moskow cautioned against reading too much into September's data, specifically the 12% drop in existing home sales released Thursday. "As I've said before, one month does not make a trend and obviously that month was an extraordinary month, so you really have to look very carefully at follow-on data as well," Moskow said. Data must be analyzed as to whether it reflects a short-term phenomenon or a longer-term trend, he added. Moskow reiterated the Fed's view that the economy remains weak and that slower growth is the more immediate focus of the Fed. "Inflation isn't a concern now," he said. Moskow added that the Fed remains on watch, and that a continued low inflation rate over the long term is crucial for maximum sustained growth. He refused to comment on whether the Fed was prepared to take real interest rates - interest rates minus the rate of inflation - to zero or below, adding he wouldn't speculate on future policy moves. Moskow also would not say when the stimulus already injected into the economy would start showing up. - By Michael McHugh, Dow Jones Newswires; 312-750-4142; michael.mchugh@dowjones.com

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