Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 5, 1994 TAG: 9402050196
SECTION: VIRGINIA PAGE: A-2 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Medium
"Usually when the Fed raises interest rates, people say the Fed is tightening credit. This time, the Fed is switching from an excessively easy money policy back to a more neutral money policy. It was excessively easy to build up the economy.
"The credit machine is beginning to work. Consumer credit is up 6 percent through November. Commercial credit is still about flat, but is no longer declining.
"The Fed had put an extra booster engine under the credit rocket. The rocket is now lifting off, so they've taken the engine off." z
Douglas Waters, Roanoke regional executive officer, NationsBank Corp.
"Greenspan certainly has telegraphed his punch. The industry has been speculating that interest rates would go up. Banks have poised themselves for higher rates. NationsBank ran the budget based on higher rates.
"As long as it's a small increase, there will not be much impact on the demand side or for the banking industry and stockholders."
Vittorio Bonomo, associate professor of finance, insurance and business law, Virginia Tech.
"If I were a member of the Federal Open Market Committee, I would have argued against it. I just think that's misguided policy. I don't think the economy is that strong, despite what everyone is saying. Retail sales are down, there's a recession in Europe, and unemployment is high.
"I don't agree with Greenspan's feeling short-term rates should be ahead of inflation. I don't think people save because of interest rates; they save for retirement and emergencies and so on.
"There's simply no evidence of overall inflation at all. If he's worried about inflation six months or a year from now, he should raise interest rates then."
by CNB