U.S.’s Bid for Global Interest Rate Cuts Fails : Economy: The Group of Seven industrialized nations, some of whom fear inflation, reject a personal appeal from President Bush.

Despite a last-minute personal appeal from President Bush, the United States lost its bid Sunday to persuade its major economic allies to join in a coordinated effort to reduce interest rates--cuts that the Administration said were necessary to arrest a spreading global recession.

The seven-hour private session of economic policy makers from the world’s leading industrial powers--known as the Group of Seven--yielded only a vague written pledge to maintain growth-oriented policies and “monitor the situation closely.”

Such meetings are held several times a year and include finance ministers and central bank presidents from the United States, Germany, Japan, Great Britain, France, Canada and Italy. They get together to discuss the global economic situation and to determine whether it calls for coordinated action.

The statement issued after Sunday’s session appeared to be an effort to paper over the differences that the various countries had aired with increasing force in recent days and to allow all sides to claim victory. It gave a nod to the importance of economic growth, as argued by the United States, but also to the need to keep prices stable--the chief concern of Germany and Japan.

U.S. Treasury Secretary Nicholas F. Brady insisted that he was not disappointed with the results.

“I think the communique speaks very clearly about the combination of growth and trying to provide for this world, and for our various economies, sustained policies which will add to that growth,” he told reporters.

Yet the “medium-term strategy” spelled out in the document did not give the United States what it had wanted.

As recently as Thursday, Bush had declared: “We want to see these interest rates down a little bit. . . . I think that would be good for the world economy, including our own.” In particular, Administration officials have argued that real interest rates--rates after inflation is taken into account--are at record highs in Germany and Japan.

The timing of the Group of Seven meeting was significant, coming only two days after a report that showed that the U.S. economy had slid deeper into recession during the first quarter.

Administration officials contend that lower interest rates in other countries would spur demand and economic growth worldwide. A major beneficiary of such a policy presumably would be the United States, whose economy is increasingly reliant upon exports.

Yet economic officials from other countries, led by Germany and Japan, argue that cutting rates is unnecessary at a time when their economies remain robust. Inevitably, they add, rate cuts would ignite inflation.

These nations insist that if the United States wants to drive the cost of credit down, it should do so by other means, including cutting inflation at home and getting its budget deficit under control.

“We are not against lower rates, but they must be earned,” said Karl Otto Pohl, president of Germany’s Bundesbank.

With such an uneven economic picture around the world, the Group of Seven officials do “their political duty of calling for what serves their short-term political interests,” said Wendy Dobson, a former associate deputy finance minister from Canada who has worked with the Group of Seven.

Before the session, Bush had taken the unusual step of inviting the finance ministers and central bank presidents to the White House for a personal meeting. Officials said the session was cordial, but it appeared that the President’s lobbying failed to change anyone’s mind.

On another subject, the communique issued by the group praised efforts toward economic reform in Central and Eastern Europe, Latin America, Africa and Asia and pledged to support those regions by creating a strong global economy and opening markets to trade.

It noted that the Soviet Union is in a “difficult economic situation” that calls for “sustained economic reforms.” As recently as December, many had been urging that the Soviet Union be allowed at least limited participation in Western aid programs available through the International Monetary Fund and World Bank.

However, officials said last week that political and economic turmoil in the Soviet Union has put that issue on hold.

The ministers are gathered in Washington in connection with the semiannual meetings of the policy-making boards of the IMF and the World Bank.

In connection with the official opening of those meetings today, finance ministers of 24 developing countries got together Sunday and issued a statement saying that the world’s richest countries should do more to keep interest rates down and to boost lending to poorer nations.