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CNN Live At Daybreak

Financial Analysts Believe Federal Reserve's Streak of 11 Straight Cuts Will End Today

Aired January 30, 2002 - 05:05   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Turning now to the U.S. economy, financial analysts believe the Federal Reserve's year long streak of 11 straight cuts on a key interest rate will end today.

As CNN's Kathleen Hays reports, signs of an economic turnaround may convince the Fed to stand pat.

(BEGIN VIDEOTAPE)

KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Alan Greenspan and his colleagues are on the lookout for signs the recession is ending as they decide whether or not to cut interest rates again. With signs of recovery building from the consumer sector to the industrial arena, many economists say the Fed will take a pass.

STUART HOFFMAN, PNC FINANCIAL SERVICES GROUP: I don't think the Fed needs to give us another refill here tomorrow and I suspect that they won't. But we have lower energy prices. We have a lot of money growth. We have lower, at least short-term interest rates. I mean I think the ingredients are there for an economic recovery.

HAYS: New orders for big ticket items called durable goods are a leading indicator for manufacturing, things like computers, cars and refrigerators. They rose two percent in December, a sign the worst may be over for manufacturing. Healthy increases in aircraft and semiconductor orders offset declines in computers and electronic equipment. And consumers got more optimistic in January. The Conference Board's index of consumer confidence rose to 97.3 from 94.6.

The 5,000 people surveyed by New York's Conference Board expressed stronger expectations for future economic growth, even as their view of the present economic situation did not change.

DELOS SMITH, THE CONFERENCE BOARD: Expectations really becomes the key because we want to know what that economy looks like in July of 2002. And since October, which is the low point, after 9-11, it was down, expectations, to a little above 70. That's very low. And in the last three months it's gone up to 97, which is just simply amazing.

HAYS (on camera): The stock market's abrupt sell-off on Tuesday could be another factor the Fed will mull over because if the stock market fails to remain on a sustained up trend, it could be a signal the economic recovery has not yet begun.

Kathleen Hays, CNN Financial News, New York.

(END VIDEOTAPE)

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