US Freezes Interest Rates Despite Inflation ConcernsMay 09, 2007 21:32 The Federal Reserve held its key short-term rate steady yesterday and warned that, despite flagging growth in the first quarter, inflation remained the main worry of the central bank.
In its statement after a one-day meeting, the policy-setting Federal Open Market Committee announced its target rate for overnight federal funds was staying at 5.25 per cent, where it has been for almost a year.
In the statement accompanying the decision, the FoMC noted growth had weakened in the first three months of 2007. It said the slowdown in the housing market, the main drag on the US economy, was "ongoing" - implying that such problems could continue for a while yet. Nevertheless, it said, "the economy is likely to expand at a moderate pace in the future", while core inflation remained "somewhat elevated". For the Fed, "the predominating policy concern is that inflation will fail to moderate" in the months ahead. The Dow oscillated between positive and negative territory shortly after the news, before climbing 53.8 to 13,362.87, a new closing high.
"There is some concern at productivity growth at the Fed now, and that could make the inflation outlook more worrying," said Alfred Broaddus, a former chairman of the Richmond Federal Reserve bank. "But I think they're fairly satisfied with what's happening. If the housing weakness gets worse, on the other hand, that could trigger a further easing." The widely expected decision to hold rates reflected conflicting pressures on the economy - likened to a mild case of "stagflation", combining weak growth with persisting inflation. First-quarter GDP growth was just 1.3 per cent, the slowest in four years, held by sluggish exports and the slumping housing market.
Ethanol Surges In Spite Of Questions About Demand, Environment, FoodMay 06, 2007 08:59 Corn-and-soybean farmer John Adams considered the pitch too good to pass up.
The 58-year-old Adams, who works 950 acres in central Illinois, didn't immediately join the farmer cooperatives pooling together to build a 100-million-gallon-a-year ethanol plant. But when he dropped by an informational meeting a few months ago, he had to have a piece.
"I was impressed," he recalled. "I had to do a lot of thinking about where the ethanol market was and where I think it's going."
Ethanol, for decades largely an afterthought in the global fuels market, is in the midst of a booming renaissance, despite a host of questions.
It is a hot topic from agribusiness boardrooms to Midwestern diners to world capitals including Washington. President Bush says the fuel additive distilled from mashed and fermented grain is a cheap-and-easy alternative to high-priced foreign oil, and some day it's already been an economic boon for moribund rural stretches.
FDA: Contaminated Feed Could Affect Farms NationwideMay 02, 2007 15:29 More farms across the United States will likely be affected by animal feed tainted with recalled pet food, federal health officials said Tuesday, after an investigation of Indiana chicken farms found the contaminated feed in more than three dozen facilities that raise poultry for human consumption.
The Food and Drug Administration said it expects farms in other states will report they received the tainted pet food and predicted that the number of plants that received contaminated feed could reach into the hundreds.
Recalled pet food containing tainted Chinese wheat gluten was found in chicken feed in 38 Indiana farms, the FDA and the U.S. Department of Agriculture said Monday, but no chicken recall has been issued because the likelihood of getting sick from eating chicken fed the contaminated product is very low, FDA officials said.
No human illnesses related to the minimally tainted poultry feed have been reported, according to the agencies.
Last week, FDA officials said 6,000 hogs that may have ingested tainted pet food entered the human food supply. Pork producers in California, Kansas, North Carolina, New York, South Carolina and Utah are being investigated for buying adulterated feed.
Bush Administration Nod For Oil Drilling Off Virginia CoastMay 01, 2007 10:33 The Bush administration looks all set to permit oil drilling in the Virginia coast angering environmentalists who feel the step could be the first in allowing drilling over other prohibited areas off the US coast.
High oil prices and fears that the US would become dependent on foreign forces for its oil have led the Congress to relent on the ban imposed after the Santa Barbara spill in 1969. President Bush has also indicated his willingness to allow for oil drilling in Alaska, but he is bound to face strong opposition from environmentalists.
Interior Secretary Dirk Kempthorne defended the decision to call for oil drilling off Virginia saying the areas were a "vital source of domestic oil and natural gas for America, especially in light of sharply rising energy prices. This energy production will create jobs, provide greater economic and energy security for America and can be accomplished in a safe and environmentally sound manner."
Last year the Republican-controlled Congress had approved drilling off the Gulf of Mexico. And even though Democrats have taken over this year, there is all probability the legislation may pass again.
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