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Saturday December 30, 2:41 pm Eastern Time
Chicago Fed's Moskow sees no recession - paper
CHICAGO, Dec 30 (Reuters) - U.S. economic growth is slowing, but the
economy is not heading toward a recession, the president of the
Federal Reserve Bank of Chicago said in a newspaper interview this
weekend, reiterating a view he has previously expressed.
Chicago Fed President Michael Moskow declined to say whether the Fed
will cut interest rates, the Chicago Sun-Times said in its Sunday
editions.
The Fed's interest-rate setting body, the Federal Open Market
Committee, warned on Dec. 19 that the economy was slowing so fast
that there was a risk of a sharp downturn, a signal the central bank
was preparing to cut rates soon. Moskow will be a voting member on
the FOMC in 2001.
``I can tell you that we will be monitoring very carefully all the
various indicators (of economic performance) ... and gathering a host
of anecdotal information as well,'' Moskow told the Sun-Times. ``And
we'll be prepared to do what's best for the American people.''
Moskow noted that the housing market has stayed ``at a very high
level,'' while businesses can still borrow and spend money, despite
higher interest rates. Also, despite layoffs announced by many
companies in recent months, those workers can still be absorbed into
other jobs, he said.
``We may see a certain number of layoffs that get a lot of
publicity,'' Moskow said. ``But if the economy is still expanding and
total jobs (created) are still going up, say 100,000 to 200,000 a
month, then those people are being absorbed into the economy and
other jobs.''
Moskow said the Fed is carefully watching rising energy prices. ``In
essence, it's like a tax increase,'' he said. ``It hurts businesses
as well, increases their costs. It's one of the elements of the risk
that we see toward weaker economic growth going forward.''
Moskow said earlier this month that he did not see a significant risk
of recession, though there has been slowing in the economy.
A Chicago Fed spokesperson could not be reached to comment on the Sun-
Times article.
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