1. Fed raised interest rates for 17th consecutive time to 5.25%
2. But market rallies as Fed appears to suggest continued rate raises may not be necessary
3. Tone of remarks less urgent, acknowledge slowing growth
4. Left room to raise rates at next meeting; inflation still above Fed's "comfort zone"
5. Convinced that harder to combat inflation than to correct slowdown if rates pushed too high
6. Some say energy prices, higher interest rates already setting stage for serious slowdown
Significant Points
1. Slower growth due to cooling of housing market, previous interest rate hikes, energy prices
2. GDP rose at 5.6% annual rate in 1st Q, but 2 inflation gauges lowered
3. Jobless claims up as rate of job creation declines
4. Unsold home inventories up, sales prices rising more slowly, construction employment down sharply
5. National Association of Manufacturers says "Evidence of a slowing economy is widespread"
6. Investors looking for signs that Fed can engineer "soft landing" to era of slower growth
Click Here for Full Digest and Source Article:
http://www.automotivedigest.com/view_art.asp?articlesID=19513 Sourced From: The Wall Street Journal, June 29, 2006; The New York Times, June 30, 2006
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