But Will It Play In Peoria?

For months, the Federal Reserve Board and the financial markets were locked in a high-stakes showdown. At the central bank, Fed Chairman Alan Greenspan had been nudging up interest rates a quarter-point a month in hopes of preempting inflation without choking the economy. But on Wall Street, inflation-phobic bond traders were revolting against Greenspan's gradualism. By bidding up yields on long-term Treasuries to the highest levels in 18 months, the markets seemed to be commanding the Fed to act boldly.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.