Feds Seen Raising Rates Despite Katrina

[Mark E. Smith]

9/18/05

WASHINGTON (Reuters) - Money now pouring into the Gulf Coast to repair the ravages of water gives Federal Reserve policy makers still more reason to raise rates again this week as they seek to build a beachhead against inflation.

As estimates soar for the rebuilding of New Orleans and other parts of the region hit by Hurricane Katrina, analysts say the potential $200 billion tag adds fiscal wallop that needs monetary policy calibration to ward off price pressure.

Rate-setting members of the Federal Open Market Committee who gather in Washington on Tuesday, while mindful of Katrina's devastation, are expected to look past it to their goal of keeping prices stable and opt for an 11th straight quarter-percentage-point increase in the federal funds rate.

http://news.yahoo.com/news?tmpl=story&u=/nm/20050918/bs_nm/economy_fed_dc_1

You could say that. Or you could say the fine folks at the Fed are getting to jack the rate up in preparation for yet another round of massive Bush Administration borrowing. After Georgie blames Congress for not cutting spending, of course.

[Pirate Smile]

1. I heard the bond market is getting jittery. The government

will be competing with the private sector for loans which is going to drive the $$ for borrowing up. The inflation bugaboo word is going around and I can tell you my family's $$$ certainly seems to be buying less and everything feels tighter.

[cliss]

2. Amazingly enough,

there seems to be some evidence of a deflationary spiral, at the same time. Think stagflation, from the late 70's.

~the storm clouds are gathering~~

[indypaul]

3. Deficits dooooo matter don't they?

Excess spending and reduced revenue will eventually
equal a weakend dollar and increased debt service costs.
Have we learned nothing from the "Reagonomics" of
the past?