Key Fed Panel Considering Status of Rates

The Federal Reserve Board began a two-day meeting Tuesday to review the condition of the U.S. economy and the dollar and to decide whether there is any need now for higher short-term interest rates.

The Federal Open Market Committee, the central bank’s policy-making body, is meeting behind closed doors amid worries over the falling dollar and at a time when many signs point to slower growth for the economy.

The committee adjourned Tuesday evening without announcing any action. It planned to reconvene this morning.

Many analysts predicted in advance of the meeting that the Fed would take no action on interest rates, instead preferring to study the economy’s performance from the sidelines for now.

The Fed has already pushed short-term interest rates up four times this year, to 4.25% from 3%. Three moves were announced immediately following meetings of the committee, composed of Fed governors in Washington and five of the Fed’s 12 regional bank presidents.

The dollar has tumbled to record lows against the Japanese yen. But many analysts said the Fed is more likely to focus on the strength of the economy in setting a course on interest rates.

President Clinton, as he prepared to depart for Naples, Italy, for a meeting with leaders of the world’s industrialized powers, questioned the need for government intervention to bolster the dollar.