9 September 2002, 17:33  Fed's Minehan says US economic recovery will proceed at 'slow pace'

WASHINGTON - The US economic recovery will proceed "at a slow pace" with business spending picking up as the consumer keeps spending, said Cathy Minehan, the president of the Federal Reserve Bank of Boston. "My own sense is the the recovery will proceed at the slow pace we're seeing for a while, with a gradual pickup in capital spending and employment growth through the end of the year," Minehan said in a speech prepared for delivery to a technology business group breakfast in the 1-495 technology corridor in the Boston suburbs. "In 2003, I would expect growth rates of 3 percent or better through the first half," she said.
The Boston Fed president noted that spending on computers and software grew in the first six months of 2002, for the first time since the end of 2000. "So there is some foundation to a forecast that technology spending will grow, albeit more slowly than we might like, and that as uncertainty wanes a bit, spending will pick up," she said.
However, she noted that there are "many" downside risks to this forecast. "Consumer confidence, spending and borrowing patterns would clearly be at risk" from a further slide in stock prices or a pick up in unemployment, she said. Minehan's remarks put her squarely in the camp of Fed officials who believe that interest rates are low enough to foster an economic recovery.
"Monetary policy is in an accommodative stance, helping to stimulate interest sensitive sectors and maintain consumer spending," she said. At some point, interest rates will have to rise, she noted. "As growth strengthens, and excess capacity is reduced, the stance of policy will need to be more consistent with stable in inflationary growth over time," Minehan said. //www.afxpress.com

© 1999-2022 Forex EuroClub
All rights reserved