Most analysts still expect the Fed to raise short-term interest rates another quarter-percentage point in spite of the fears and uncertainty associated with hurricane Katrina. They probably will be more worried about potential inflation. "We suspect the FOMC [Federal Open Market Committee] will say that while Katrina had a devastating regional impact, aggregate growth should be only temporarily damped," Action Economics managing director Kim Rupert said. However a few analysts don't think the Fed will increase rates after a huge disaster such as Katrina. "Never in the past has the Fed raised interest rates immediately after such a devastating event," said a Merrill Lynch economist. Source:
http://www.msnbc.msn.com
