Economic Triple Threat Is in Focus as Officials Meet

Wall Street Journal (08/04/08) P. A2; Reddy, Sudeep
U.S. Federal Reserve policy makers currently face a three-pronged threat: growth is too slow, as the sluggish housing sector, soft job market and steep gas prices threaten consumer confidence; inflation remains too high because of skyrocketing global commodity prices; and credit markets are still in shambles. Balancing those risks will be the focus of the Fed's policy meeting this week, although the central bank is expected to leave the benchmark federal-funds rate alone. Most Fed policy makers concede that their next move will be to hike interest rates, but opinions differ on when to initiate such an increase. In particular, the crisis over Fannie Mae and Freddie Mac has worsened some financial conditions, which could have an increasingly negative impact on an already dire housing outlook.