
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, February 8, 1994                   TAG: 9402100005
SECTION: EDITORIAL                    PAGE: A6   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Short

INTEREST RATES

THE STOCK market didn't react well to the Federal Reserve Board's decision to push up short-term interest rates. But that doesn't mean it was a bad decision.

Notwithstanding Friday's plunge in stock prices, it will be months and years before we can know whether the Fed's action - raising rates that banks charge each other for overnight loans - was wise. It is supposed to be a pre-emptive strike against recurring inflation.

Our guess is that it was a good move. Fed Chairman Alan Greenspan figures that nudging up short-term interest rates in money markets won't seriously threaten long-term rates crucial to consumer loans and capital investment. And while it may slow expansion a bit, the intervention could also sustain it.

Later on in his term, President Clinton could be thanking the Fed for its unusual caution now.

by CNB