U.S.: Why The Fed Can't Relax Just Yet

Despite some slower stats, financial conditions haven't tightened much

Wall Street is easing into the notion that the Federal Reserve's work is done. Rate hikes totaling 1 3/4 percentage points since June, 1999, appear to be having their desired effect: Overall demand, led by a cooler pace of consumer spending, has slowed, even as strong productivity growth gives the economy more room to run without spurring inflation. Some Fed watchers are even starting to speculate that the Fed's next move in 2001 will be a rate cut.

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