Federal Reserve Chairman Faces the Test of His Career.

Publication: The Boston Globe (Boston, Massachusetts) (via Knight-Ridder/Tribune Business News)

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COPYRIGHT 2000 The Boston Globe

Byline: Kimberly Blanton

May 16--Federal Reserve chairman Alan Greenspan, in his meeting today with central bank policy makers to set interest rates, faces the most difficult test of his remarkable career at the Fed: Can he ensure that the nation's longest economic expansion continues?

Most economists expect the Fed to boost interest rates by a half-point, continuing a campaign begun last summer to rid the economy of inflationary tendencies. A few economists returned to earlier predictions of a quarter-point increase after the newest batch of data, released last week, showed wholesale prices had dropped and retail sales had slowed.

But while the world is focused on how much rates will rise, members of the Federal Open Market Committee, headed by Greenspan, are focused on the policy dilemmas involved in deciding how much to raise rates, economists say.

A big hike could further unsettle financial markets, causing stocks to tumble and making it more difficult for the Fed to engineer a smooth landing....

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