Let's Not Tighten Now

The inflation hawks are circling again. Third-quarter growth is likely to exceed 3%, and that would mean the U.S. economy has grown by almost 4% in the past year, well above the hawks' supposed speed limit of 2.5%. So Alan Greenspan is once again under pressure to raise rates to head off an inflationary surge. Indeed, the Fed chairman appeared to be preparing the financial markets for such action when he sounded an alarm about the possibility of rising wage costs in remarks before Congress on Oct. 8. The dour warning, coming just a few months after Greenspan's upbeat assessment of the economy, may have been merely a tactical concession. But it was a shocker.

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