-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- Blistering U.S. Growth Worries IMF Updated 2:29 PM ET January 29, 2000 By Knut Engelmann DAVOS, Switzerland (Reuters) - The United States needs to tame blistering growth and raise interest rates soon to prevent the world's top economy from overheating, a senior International Monetary Fund official said on Saturday. Stanley Fischer, the fund's first deputy managing director, said he was confident the U.S. Federal Reserve would confirm expectations in world financial markets and raise short-term interest rates when its policy-making council meets next week. Nothing less than the future of the entire world economy depended on U.S. policy-makers, he told a news briefing at the World Economic Forum's annual meeting, an exclusive get-together of the world's movers and shakers in the Swiss Alps. Asked what was his main concern for the world's near-term economic outlook, Fischer said: "A lot will depend in the short run on how the United States handles its excessively rapid growth and possibly rising inflation." But he added: "If that is handled with the skill that the Fed has shown it is capable of in past years, then I expect we will have continued and rising world growth." Fed policymakers meet on February 1 and 2 and are widely expected to bump up the key Fed funds overnight bank lending rate by a quarter percentage point to 5.75 percent just as the U.S. economy enters a record 107th month of unbroken expansion. On Friday, the U.S. government said the economy grew by a red-hot 5.8 percent, the briskest pace of increase in a year, driven by strong consumer spending and businesses building up inventories. Fed officials have long worried that such strong growth, coupled with the tightest labor market conditions in a generation, will eventually push up wages and prices. They nudged up borrowing costs three times last year, but those moves have had little impact yet on strong U.S. demand. "The Fed has been signaling a rate increase next week," Fischer said. "The inflation pick-up suggests that will happen." NEW ECONOMY, OLD LAWS U.S. Treasury Secretary Lawrence Summers, arriving in Davos with President Clinton, said the U.S. economy was in good shape but warned investors not to get carried away. "In many ways we have a new economy in the United States," he said. "But it is a very serious mistake to overinterpret that relationship. The laws of economics have not been repealed, much less those of human psychology." Summers also said that the nation's low savings rate continued to be a dark spot in an otherwise bright picture. "For the new economy to succeed, it must be built on old virtues," he said. "Our national savings rate is still far too low, driven by a personal savings rate that is not where it should be." Summers added that the high and rising U.S. trade deficit was "a real concern" and could eventually pose a threat to economic growth. He reiterated long-standing demands for Europe and Japan to boost their own economies, thus helping to increase demand for U.S. exports. At last week's meeting of finance ministers and central bankers from the world's seven major industrial nations, the United States won high praise for its economic boom and historically still-low inflation. But the group also expressed concern about the low U.S. savings rate. The mere fact that such less-than-glowing language on the U.S. economy was included in the G7 statement pleased some of Washington's European partners who have complained about what they see as a persistent U.S. tendency to lecture the rest of the world. "It is important that each of our countries, including the United States, have some structural problems to solve," French Finance Minister Christian Sautter told the Davos meeting. "We have to work in each of our countries." <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are not allowed. Substance�not soap-boxing! These are sordid matters and 'conspiracy theory'�with its many half-truths, misdirections and outright frauds�is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://home.ease.lsoft.com/archives/CTRL.html http:[EMAIL PROTECTED]/ ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
