Fed's Beige Book Shows A Strong Economy, Fed Govs. Warn.

Byline: Claire Mencke, Investor's Daily

Home-building activity finished 1999 with a burst of strength as December housing starts pushed up 7.1%, the Commerce Department said Wednesday. That news made many think the Federal Reserve's three interest-rate hikes last year might not satisfy hawkish policy-makers who want to slow the too-hot economy. In fact, for some economy-watchers, the numbers raised the specter that we may be in store for a series of rate hikes this year. Meanwhile, two Fed governors in remarks Wednesday said pre-emptive rate hikes by the central bank are neededto thwart higher inflation. But the Fed's beige book, its public backgrounder for its next policy meeting, didn't set off any new alarms over inflation. Homestarts rose in December to an annualized 1.712 million units. Forecasters had looked for starts to be unchanged from November's 1.6 million units. The December starts were the strongest since March 1999 - before the Fed began raising …