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No Green Light to Tightened Money Policy : Brady Discounts Inflation Fears in Price Hikes

From Reuters

Treasury Secretary Nicholas F. Brady today played down last Friday’s 1% rise in February wholesale prices, saying that some other economic indicators have shown softness recently.

“Some are up, some are down . . . the balance is in the middle right now,” Brady said in an interview on NBC’s “Today” show.

Brady noted that retail sales and the operating rate of American manufacturing industries had both declined in February.

“I’m very optimistic right now,” he said about inflation.

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Recent reports have also shown declines in imports and industrial output, further indicating a slowing economy.

Asked whether the rise in wholesale inflation would prompt the Federal Reserve to raise interest rates, Brady described Fed Chairman Alan Greenspan as competent and said, “I have great confidence in him. He has to do what he has to do.”

Pressed to elaborate, Brady said he is not giving a green light with his comments to the Fed to tighten monetary policy.

The Administration and the Fed have had a running battle over inflation and interest rates since President Bush took office.

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The Administration for its part must work to reduce the federal budget deficit, Brady said.

The stock market fell sharply Friday after the Producer Price Index was released, but Brady said he was not worried.

“Stock markets go up and down. We’ll just have to watch,” Brady said.


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