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COPYRIGHT 2005 Voxant Inc.
Original Source: NIGHTLY BUSINESS REPORT
SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: An ill wind blows through Wall Street, and her name is Rita. The Dow falls almost 85 points and the NASDAQ slides 15. It comes as investors watch oil prices soar on concerns on what this next storm could do to oil production in the gulf.
JEFF YASTINE, NIGHTLY BUSINESS REPORT ANCHOR: It`s not Rita, but Katrina that could be on the minds of Federal Reserve policymakers as they meet tomorrow to set interest rates. We`ll have a preview of what to expect from the Fed.
GHARIB: The former head of Tyco can expect to spend most of the next two decades in prison. Dennis Kozlowski is sentenced today for his part in grand larceny, conspiracy and fraud at the conglomerate.
YASTINE: Then, how about putting some tofu in your tank? Soybeans are one unlikely answer to the rising cost of fuel, especially when they`re added to diesel.
GHARIB: I`m Susie Gharib.
YASTINE: And I`m Jeff Yastine. Paul Kangas is on assignment today. This is NIGHTLY BUSINESS REPORT for Monday, September 19.
GHARIB: Good evening, everyone. Crude oil futures surged today amid fears the latest storm of the season, Rita, could wreak havoc on the oil platforms of the Gulf of Mexico. In New York trading, light sweet crude for October delivery rose $4.39 to $67.39 a barrel. That`s a gain of 7 percent and this is why. The storm is now taking aim at southern Florida, but forecasters say once it hits the warm waters of the gulf, it could be trouble. Chevron and BP have already begun evacuating workers off their production platforms. Murphy Oil expects to start that process tomorrow. Producers and refiners in the gulf are still struggling to restore oil production after the devastation of hurricane Katrina.
Well, hurricane Katrina will probably be the hot topic of discussion with policymakers at the Federal Reserve tomorrow. The Fed meets to decide whether to continue raising short-term interest rates. Darren Gersh has a preview of what to expect.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: After 10 quarter percentage point interest rate hikes in more than a year, the Federal Reserve`s next move is no longer considered a sure bet.
TOM GALLAGHER, POLITICAL ECONOMIST, ISI GROUP: Looking at the futures markets, the market is the least sure about the near-term pace of Fed policy than they have been since the Fed started hiking rates.
GERSH: One reason, of course, is Katrina. Former Federal Reserve Governor Laurence Meyer`s best guess is the cataclysm will cut one percentage point off growth in the coming months. But it is only a guess and the Fed faces uncertainties about Katrina`s impact on both growth and inflation.
LAURENCE MEYER, VICE CHAIRMAN, MACROECONOMIC ADVISERS: Natural disasters typically lead to stronger economic growth after a period, so on the one hand it has to weigh the negative hit immediately against the added strength next year. That`s hard to put numbers on those.
GERSH: If Meyer is right, the economy will still be growing at a healthy 3.75 percent, enough to convince the Fed to raise rates tomorrow.
MEYER: The fundamental challenge is still to contain inflation in an economy that has been growing above trend and is arguably already at or close to full employment.
GERSH: But Alan Greenspan`s risk management philosophy is to head off low- probability events that can cause large economic pain. And in this case, former Fed Governor Lyle Gramley says the big fear is consumers will pull back, seeing Katrina as a warning to salt away some emergency cash.
LYLE GRAMLEY, SENIOR ECONOMIC ADVISER, STANFORD WASHINGTON RESEARCH: I think in this case, the low probability, negative consequence of a big rise in the personal saving rate will lead them to pause...
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