Reply #19: From the Boob Economist Dept: Standish Mellon expects rate cuts to resume [View All]

[UpInArms]

Standish Mellon expects rate cuts to resume in 2007

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38587.3589230903-840790559&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

BOSTON (MarketWatch) - Standish Mellon Asset Management, one of the largest U.S. fixed-income managers, said Tuesday it expects the Federal Reserve to continue hiking interest rates in 2005, but the pace may slow while inflation remains low and oil's economic impact remains uncertain. The next tightening phase will occur in 2006 as the unemployment rate falls toward 4.75% and the Fed puts the brakes on the economy, letting interest rates "overshoot" equilibrium levels to lock in low inflation. Rate cuts will resume in 2007 and beyond, according to an analysis of asset classes by Standish Mellon, a unit of Mellon Financial Corp. Shares of Mellon (MEL) fell 15 cents Monday to $32.21.