Federal Reserve to Discuss Markets, Interest Rates
STEVE INSKEEP, host:
Credit concerns have left the financial markets volatile. The Dow Jones Industrials and other indexes went up sharply on Monday, but that was after a big drop on Friday. And amid all of that change, investors will be watching to see how the Fed responds. A committee of the Federal Reserve meets today.
NPR's Jim Zarroli reports.
JIM ZARROLI: The Fed is meeting at a time when the housing market seems to grow weaker by the month. That's already wreaked havoc on the subprime mortgage business. As the trouble spread to other markets, Wall Street is increasingly worried about a credit crunch.
Stuart Hoffman, chief economist at PNC Financial Services, says Fed policymakers are unlikely to lower interest rates when they meet today. But Hoffman says they will have to address investor fears about what's happening.
Mr. STUART HOFFMAN (Chief Economist, PNC Financial Services): They will continue to say that their predominant policy concern is faster inflation. But it's going to be a little hard for the Fed to ignore the elephant in the room here in terms of the problems in the subprime market and the spreading that's happening to mortgages in overall markets.
ZARROLI: Hoffman says the Federal probably tried to reassure the markets by signaling that it's monitoring the housing decline. And after two weeks of falling stock prices, investors seemed to be ready for some positive news. Yesterday, stock prices soared, with the Dow seeing its biggest point gain in five years. Some of the best performing stocks for financial services companies which have been battered by all the talk of a credit crunch.
Jim Zarroli, NPR News, New York.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.