Mixed signals from Fed stir speculation

An unusual and unexpected corrected statement on interest rates from the Federal Reserve stirred up recent media speculation on the direction of the economy.

An unusual and unexpected corrected statement on interest rates from the Federal Reserve stirred up recent media speculation on the direction of the economy.

While most analysts expect moderate increases in interest rates to continue, a debate raged over which concern ranked higher on the Fed's agenda: rising inflation or a slowing recovery. Many agreed that while inflation appears to be a higher priority, the Fed faces a challenge to curb it without damaging the economy.

Most frequent messages

1. The Federal Reserve will continue to increase interest rates at a moderate pace

2. This is the eighth rate increase since June 2004

3. Keeping inflation in check is higher on the Fed's agenda than stimulating the economy

4. The Fed must walk a fine line to curb inflation without dampening economic recovery

5. The market zig-zagged and finally rallied following restatement from the Fed

Based on 31 US stories from web versions of print and broadcast media, appearing May 4-5, 2005

Evaluation and analysis by CARMA International

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