THE US Federal Reserve planners opened a two day session in Washington yesterday to debate monetary policy, but in the absence of inflationary pressure they are expected to leave short term US interest rates unchanged.
"They'll pretty much stay the course," predicted analyst, Mr Michael Flamment, of Wright Investors' Service.
"They like the combination of moderate growth and low inflation. For the year, economic growth was pretty close to the target and outside of oil prices, inflation seems to be under control."
While US gross domestic product expanded at a surprisingly robust 4.7 per cent in the fourth quarter of last year, inflation as measured by a chain weighted price index linked to GDP was limited to 1.8 per cent in the quarter.
The Fed's "beige book", a summary of reports on US economic conditions compiled by its 12 branch banks, late last month found that the economy was growing at a moderate clip and was displaying no "significant price pressures other than for energy items."
Employment costs in the final three months of 1996, a closely watched marker of potential wage driven inflation, increased 0.8 per cent, in line with expectations.
