Further U.S. cuts needed — analysts

Press, 24 July 1986, Page 29

Further U.S. cuts needed — analysts

NZPA-Reuter Washington Slower second-quarter growth in the United States economy may mean that new interest rate cuts by the Federal Reserve Board are needed.

Some analysts have said that a weak 1.1 per cent expansion in gross national product in the second quarter meant the U.S. central bank would keep a close eye on the economy for signs of strength, and if the sluggishness persisted the Federal Reserve Board

will have to cut interest rates again to permit satisfactory growth. The Senate Banking Committee will hear from the Reserve Board’s chairman, Mr Paul Volcker, on the economy today and is sure to press him for his view on the need for cutting interest rates. The board this month cut its key discount rate to 6 per cent. The 1.1 per cent rise in GNP during the AprilJune period reported by the Commerce Department was the slowest

quarterly expansion since the end of 1982. But that news was softened by an upward revision in the growth rate for the first quarter to 3.8 per cent from 2.9 per cent due to new information.

Economic growth in the United States has been hindered by record imports, slack business investment and a slump in the petroleum industry from oil price declines that has spread to other sectors of the economy, department officials said.