John M Berry says that strong corporate profits and consumer spending figures will ease fed pressure for a 50-basis-point increase
Inflation figures released by the US Department of Commerce have somewhat soothed market fears that worsening inflation will cause Federal Reserve officials to step up the pace of interest rate increases. The strong 2004 corporate profits data the department put out at the end of March should be viewed in the same way. A number of Fed officials, including chairman Alan Greenspan, have said that if solid economic growth leads to increases in labor costs, the pressure at first will probably result in declining profit margins rather than more inflation. The officials are assuming that with...
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