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      Washington, D.C., -- Another decision to reduce interest rates by the Federal Reserve would be welcome and in line with some expectations in the financial markets, Joint Economic Committee (JEC) Chairman Jim Saxton (R-N.J.) said today. Saxton pointed to the two recent Federal Reserve interest rate cuts as appropriate, and noted that many of the reasons for reducing rates are still in force.

      "I would welcome a Federal Reserve decision to reduce interest rates tomorrow," Saxton said. "The market price indicators we use at the JEC still show that commodity prices are weak, bond yields remain low, and risk spreads are still wide. Without signs of inflation in broad inflation measures, the Federal Open Market Committee (FOMC) can continue its recent policy by cutting interest rates yet again."

      "The market price indicators used by the JEC are forward-looking indicators that can guide preemptive changes in policy in time to head off potential future inflation or deflation," Saxton said. "These indicators were the basis for my call for an interest rate cut before the last FOMC meeting in October, and for an unusual intermeeting rate cut immediately thereafter. The subsequent Federal Reserve policy actions seem quite consistent with the rationale for monetary policy outlined by the JEC over the last two years."

Press Release: #105-196

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