Former Fed Gov: No Change In Fed's Message Today

Tuesday, 12 Dec 2006 | 9:30 AM ET

Investors won’t have to wait much longer to find out where the Fed stands on interest rates.

The FOMC announcement comes at 2:15 p.m. New York time (and you can see it live on cnbc.com). It's widely expected that interest rates will hold steady at 5.25% for the fourth consecutive time. More important will be clues the central bank gives about its intentions for next year.

CNBC’s Steve Liesman previewed what The Fed will likely say, with Laurence Meyer, Former Governor Of The Federal Reserve. He’s currently Vice Chairman Of Macroeconomic Advisers.

Ahead of the Fed
While no change is expected to interest rates, there is always room for surprise. Laurence Meyer, Macroeconomic Advisers Vice Chair, previews the decision with CNBC's Steve Liesman.

Laurence Meyer first explained what he thinks the Fed is seeing in the economy: "Unemployment is a little lower, growth is a little weaker, news on inflation has been relatively mixed – none of it is enough to change the Fed’s message."

Meyer said he feels, things are moving in the right direction. "This (economic slowdown) is a measured and a welcome slowdown that relieves resource utilization pressure. Inflation looks like it moderating. (The Fed) is pretty happy with how things are evolving which is in line with what they expected."

Liesman asked about the weakness in the housing and autos sectors. Meyer responded the point here is that there is concentrated weakness in these sectors. "As long as it doesn’t spill over into other sectors the economy can withstand these drags. It’s a narrowly based decline –of course it bears watching – if it spills over to broader consumer spending (that could raise concerns.) I think the drag from the housing sector should soon be abating."

As for ’07 – Meyer said he expects interest rates will either hold, or they will be tighten. Growth will come back to about 3% in the second quarter. For his closing comment Meyer said- "Give them a gold star!"


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