Oregon daily emerald., May 18, 1994, Page 9, Image 9

Fed boosts two interest rates
WASHINGTON (AF) The Federal Reserve
Iniinr hed its most aggressive attack on inflation
in more than five years Tuesday, boosting two key
interest rates by n half percentage point each
The a< lion triggered similar increases by coin
mart ial banks in their prime lending rates, mean
ing that short-term borrowing costs will be rising
for millions of American*
But it also brought cheer* from Wall Street where
both stocks and bonds posted impressive rallies a
sharp contrast to three smaller Fed hikes earlier this
year that sent financial markets into tnilspins
The Dow [ones industrial average shot up 49 11
[Hunts while the Treasury's benchmark 30-year bond
posted nn impressive price gain that sent the yield
down to 7.29 percent.
Analysts attributed the turnabout in market sen
timent to a belief that the Fed's moves meant the
central bank was through for the time being.
"This is the decisive action that markets were
looking for The Fed has cleared the air.” said David
Jones, nn economist at Aubrey G Lanston & Co.
in New York
Analysts said the Fed's latest increases may hr*
a mixer! blessing for consumers, driving up short
term borrowing costs Including home equity loans
that are tied to the prime rate hut at the same time
lowering the cost for long-term borrowing because
of the rally in bond markets.
The cost of 30-year mortgages hit a two-year high
of 8.77 percent last week, but analysts said mort
gage rates should now retreat to around 8 25 [>er
cent.
In a brief statement, the Federal Reserve said it
was lioosting the discount rate, the interest the cen
tral bank charges on loans to commercial banks,
from 3 percent to 3.5 percent It marked the first
increase in the discount rate since 1989
The central bank said it also was raising the fed
eral funds rate, the rate banks charge each other,
from 3.75 percent to 4 25 percent Farlier this year,
it had boosted the funds rate three times in quar
ter-point moves.
It marked the first time the central Ivmk had raised
Initli its discount rate and the funds rate by one-half
point since Feb. 24 1989. The Fed said it was mak
ing the two credit moves to "maintain favorable
trends in inflation and thereby sustain the economic
expansion."
The Fed statement was issued at the end of a reg
ularly scheduled meeting of the Federal Open Mar
ket Committee, the group of Fed board members in
Washington and regional Ixuik presidents who meet
I
eight times a year to set interest rate polu ms
Tile Fed said it believed its latest rate increases
had "substantially" removed the looser credit stance
the central hank had maintained nil of Inst year
Economists said this was a strong signal the i entrnl
hank was through for several months
Bruce Steinberg, an economist at Merrill l.ynch
in New York, said the central bank could remain
on the sidelines for the rest of 1994. espe< mllv if
the current benign inflation performance contin
ues.
He said he was foret listing that even with the
credit tightening that has occurred "economic
growth should remain solid but not excessive "
(’resident Clinton insisted before the Fed
announcement that he did not believe the credit
tightening would increase the risks of a new reces
sion
"1 have every < onfldonee that we're still going to
have another good year this year and that we will
be able to offset any modest increase in interest nites
with increased growth. ' Clinton said.
1 Jlura I) Tyson, the president's i luef economic
adviser. said the administration "rvsjMx ts the inde
pendence of the Federal Reserve and neither i rit
ici/es nor endorses its actions " She said the Fed's
action did not alter the administration's belief that
the economy was "on a path of sustained growth,
strong employment creation and low inflation "
However, some congressional Democrats
expressed alarm that the latest rate hike ran a seri
ous risk of shoving the country into a rei esston
by 199ft, the year of the next presidential election
They said the central hank was ignoring nx nut gov
ernment reports that showed economii growth slow
ing from the torrid pace set late last year and price
pressures abating
"The behavior of the Fed is an outrage." said Sen
Byron Dorgan. IFN I) "The Fed is responding more
to the interests of money center hanks than to the
interests of the productive sec tor of the American
economy
"The Federal Reserve is om e again putting the
brakes on the nation's economic recovers and in
doing so hurting hard-working Americans," said
Sen Jim Sasser. IF-Tenn
Senate Majority Leader George Mitchell and six
other senators from New England, a region that has
lieen hard hit by a sluggish t<< onomv. released a let
ter to Federal Reserve Chairman Alan Greenspan
contending that "in our part of the country, there
are no fires of inflation that need to be dampened
HEY SENIORS
« • «
ITS A SENIOR CELEBRATION!
"THE CLASS OF 1994
SENIOR SEND OFF"
FEATURING SPECIAL
MUSICAL GUEST
...MULTIPLE SARCASM!
Please be our guest for this special occasion, as the
University of Oregon Alumni Association con
gratulates you on your time at the University. Join
your classmates for one last campus bash,
Wednesday, May 13 from 5:00 to 7:00 P.M.
in the Erb Memorial Union.
The Class of 1994 Senior Send Off is free,
so we'll see ya there!
Sponsored by: University of Oregon
Alumni Association and the
Student University Relations Council.
i*i i
mocurios f
'l£r<
Man urges banning
of un-American books
NEW YORK (AIM — A
si hool board member is
seeking to ban books several
books from district libraries,
including a biography of
Marlin Luther King Jr.,
Ins ause be says they promote
racial separation
Frank Borzellieri said the
books prevent students from
being proud to be
Americans "
We are a yslute. Christian.
British, Protestant nation." he
said.
"Where does it say we have
to (ik us on other i ultures?"
Borzelliori. who was
ele< led to the nine-member
District 24 si hool board a
year ago. objei ts to the King
iiook. Young Shirt in's
Promisi’, because "it doesn't
say he was a leftist hoodlum
with significant Communist
ties "
"King was a hvpocritii al
adulterer." he told New York
Nowaday
Other tlooks on Borzelheri's
hit list include I llntr k'nghsh,
about a (Chinese girl's struggle
to learn English, and Jumbo
Mentis Hello, the Swahili
Alphabet, a pit tun* book with
Swahili words
The New York. < ’iI\ school
system is composed of a
i (Mitral Hoard of [-'dot ation
and tl district school boards
that run tin* tdtnnnntary anti
junior high s« [tools.
Horzellieri plans to make
his presentation at a Distrii t
24 board meeting Thursday
night He did not return a call
placed through the distriit
offit e Tuesday seeking
comment
His home phone numlier is
not listed
"As far as we’re t om erned
these books are educationally
appropriate and wo fully
believe that they have a place
m our s< [tools’ libraries," said
John l-'alut, deputy
su pert ill eltdetdadr Dislrii t 24.
which is in the borough of
Queens
Horzellieri s proposal is the
latest in a series of fights over
multicultural edui ation in
the s< hool tlistrii t
In 1992. the distriit
ohjet ted to the proposed
"Children of the Rainbow"
t unit iilum. t omplaining that
it taught i hi Id rim to respet t
gav people
ummer
UNIVERSITY OF OREGON
JUNE 2(T AUGUST 12
Planning to continue 1 /our studies
this summer? See if any of these added
) courses fit into your /duns and register
by Duck Call today.
I RVVK 241 Intro to imaginative Writing:
I iction (3) June 2t> August 12 Mtvts
jL 1h 30 21 20 W plus line Saturday s»*>siun to be
P arranged Miles <C K\ HISS)
1 C 314 Intermediate Macroeconomic
I henry (3) Julv in August 12 Meet . 12 u>
1 iMl WH I ) Smith u K\ 43133)
.AH I 3tIS Dalcm/e t urhythmies i3)
Juls IS August 12 M»vts OH.UU-Oo 50
Ml W11 Iscntvrg (( K\ Ml I 40H 43161
Mi l son 43162)!’ \Ponly
ITI’M 40S 3iih fcnvironmental Issues in
Russia (3) August I 12 .Meets 12 30 is 20
MUWHi Khabibultou (I K\ I’lTM 40S
4312S. I’PI’M 306 43120)
ITI’M 407 507 (.roup Process and
Leadership (2) June 21 -25. Meets IS.-00
20 :H111, and 08 V) lh:50LS Downes Phipps
(C RN PPI’VI 407 41184; PITM 507- 41185)
17 NT only
I NY 427/527 Abnormal Psychology (.1)
June 20 August 12. Meets 13:00- 13:50
MUW11 Markley, Mohlman. (( K\ INI
427 41111; INI 527 43153)
An nfual x’f’ff'ftunttt/. tfftnnatnr a, turn mtitluSu'n
< tv«ulturjl Jtirruty *nJ t itnpJwmY «-ifh
tnc Amriwaru un’.H [hwhfHm Ait
m