Mixed Signals Vex the Fed

Lower productivity and factory orders plus higher labor costs send mixed signals to the central bank; still, rate hikes before fall seem unlikely

Inflation—at least in the form of wage pressures—is still very much on the radar screen, according to government data for the 2006 fourth quarter released Mar. 6. And another report issued the same day detailed a big drop in U.S. factory orders for January. The reports illustrate the cross-currents faced by the Federal Reserve as it seeks to keeps prices in check while ensuring that economic growth remains on a solid track.

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