ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Wednesday, December 18, 1996           TAG: 9612180041
SECTION: BUSINESS                 PAGE: B-6  EDITION: METRO 
DATELINE: WASHINGTON
SOURCE: Associated Press

INTEREST RATES STAY THE SAME ANALYST: FED TO LET IT RIDE IN ALL OF '97

The Federal Reserve passed up a chance to raise interest rates at its final meeting of the year Tuesday.

Following more than 3 1/2 hours of closed-door discussions, Fed policy-makers announced that they had decided to leave rates unchanged, meaning that millions of consumers and businesses whose loans are tied to Fed rates will see no change in their borrowing costs.

The Federal Open Market Committee, composed of Fed governors in Washington and regional bank presidents, meets eight times a year to review interest rate policies. The panel next meets Feb.4.

Most economists believe there will be no change at that meeting either; indeed, some analysts are forecasting the central bank could stay on hold for most of 1997.

``The U.S. economy remains on a moderate growth, low inflation path, very much in line with Fed hopes,'' said Bruce Steinberg, senior economist at Merrill Lynch in New York. ``We believe the Fed will remain on hold through the first half of 1997 and probably through most of the second half as well.''

The central bank last changed interest rates Jan. 31, when it reduced its target for the federal funds rate, the interest that banks charge each other, by a quarter-point down to 5.25 percent.

The Fed has continued to pass up chances to raise rates, although some economists continued to insist after Tuesday's meeting that the best bet is still that the central bank will start raising rates in late spring or early summer of 1997.

These economists said any rate changes next year were likely to be small, mid-course corrections aimed at prolonging an expansion that is already the third-longest since World War II.

``The economy right now appears fairly balanced, and any moves by the Fed would be in the realm of fine-tuning as opposed to major shifts up or down,'' said Lynn Reaser, chief economist at Barnett Banks in Jacksonville, Fla.

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