US Federal Reserve Chairman Alan Greenspan may downplay mixed economic reports since the end of the Iraq war and reassert his optimism about stronger growth in the year's second half to the US Congress today, economists said.
"Greenspan hasn't received enough information about the postwar activity to ditch his basic forecast that the economy will get better in the second half,'' said Nancy Roman, president of G7 Group Inc, an economic advisory firm whose clients manage more than US$100 billion.
``He will play down fears of imminent deflation, while leaving the door open for additional rate cuts if the economy weakens," she said.
Greenspan and other Fed policy makers on May 6 kept its benchmark interest rate at 1.25 percent, the lowest since 1961, saying growth may accelerate later this year now that fighting has ended in Iraq. The Federal Open Market Committee that Greenspan leads also cautioned that growth might be threatened by "unwelcome" further declines in inflation.
Investors are betting the Fed is concerned enough about the second scenario to cut the interest rates, lest slowing inflation turn into an actual decline in prices and deepen an economic slump.
Benchmark 10-year Treasuries had their biggest gain in eight weeks on Tuesday, as the 3 5/8 percent note due in May 2013 rose 1 point at 5:31pm in New York. Its yield fell as much as 13 basis points to 3.35 percent, the lowest since 1958.
Traders who make markets in futures contracts on the overnight lending rate fully expect the central bank to reduce rates by 0.25 percentage points on June 25. Futures contracts for July delivery have an implied yield of 0.99 percent.
The Fed chairman was to speak before the Joint Economic Committee of Congress yesterday at 9:30am.
Greenspan told the House Financial Services Committee on April 30 that he expected the economy to expand at a "noticeably better pace" following the end of the conflict in Iraq earlier that month.
The economy grew 1.6 percent at an annual rate in the first quarter, and the rate may increase to 3.8 percent in the year's final three months, based on the median economist forecast in a Bloomberg News economist survey.
Since the chairman last spoke to Congress, "activity data have continued to be mixed and disinflation has accelerated," wrote Peter Hooper and Joseph Lavorgna, US economists at Deutsche Bank Securities.
Consumer confidence has risen and oil prices have declined since the fighting subsided, and the Standard & Poor's 500 Stock Index is up 8.4 percent since March 31. Congress is preparing to pass a tax-cut package valued at US$350 million to US$550 billion, and monetary policy has kept borrowing costs low for businesses and consumers.
Still, there are risks. Factory use is declining and that American companies aren't doing much hiring. Without much demand, companies have to cut prices.
"Overall demand right now is tepid," said Carl Tannenbaum, chief economist at ABN Amro North America Inc in Chicago.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique