By John S. McClenahen In sharp contrast to Merrill Lynch & Co. chief economist Bruce Steinberg, who expects two 25-basis-point cuts yet this year, Maury Harris, chief U.S. economist at UBS Warburg LLC, doesn't see the Federal Open Market Committee ...
ByJohn S. McClenahen In sharp contrast to Merrill Lynch & Co. chief economist Bruce Steinberg, who expects two 25-basis-point cuts yet this year, Maury Harris, chief U.S. economist at UBS Warburg LLC, doesn't see the Federal Open Market Committee (FOMC) cutting U.S. short-term interest rates at its Nov. 6 meeting. The influential federal funds target rate is now 1.75%, a 41-year low. And Harris believes forthcoming economic data won't be weak enough for the FOMC to change that. For example, Harris still expects the U.S. Commerce Department to report on Oct. 31 that the U.S. economy grew at a 3% inflation-adjusted annual rate in the third quarter. And he expects 2.5% real growth in the current quarter. Harris also believes that business purchase of goods has stabilized after months of inventories being worked down and very little in the way of capital expenditures taking place. What's more, "consumer purchasing power, at least for the time being, should allow decent [fourth-quarter] spending growth near our current 2.5% projection for annualized real personal consumption expenditures," Harris says.
