a recent article or editorial piece on monetary policy

Solution Preview

THE ARTICLE

Curbing inflation becomes major choice of US monetary policy

www.chinaview.cn 2005-05-04 13:31:12

Related: US Fed raises key interest rate to 3 percent WASHINGTON, May 3 (Xinhuanet) -- The US Federal Reserve (Fed) on Tuesday raised its federal funds rate, the interest commercial banks charge each other on overnight loans, by a quarter of a percentage point to 3 percent from 2.75 percent. It was the eighth straight increase in interest rates since the Fed began tightening the monetary supply from the end of last Junewhen the key US interest rate stood at a a 46-year low of 1 percent. It showed that, despite signs that the US economic growth is slowing down, the Fed has seen a bigger risk -- the upward creep in inflation and it must take firm actions to curb it by continuing to increase the short-term interest rates. It can also be seen as a clear signal that curbing inflation becomes a major choice of the Fed's future monetary policy. The latest action of raising interest rates was taken at a time when the US economic expansion is slowing down after a strong recovery in the past two years. The US economy increased at an annual rate of 3.1 percent in the first quarter of this year following a rate of 3.8 percent in the final quarter last year and comparing with an increase of 4.4 percent in the whole year of 2004, according to a US government report released last week. The increase in the first quarter was the slowest expansion in two years since the first quarter of 2003, when the annual growth rate was 1.9 percent. The report showed that the real ...