Investors Counting On Fed To Spread Christmas Cheer

The nation learns Tuesday whether the Federal Reserve this Christmas will give out a jolly cut in interest rates, or risk becoming the Scrooge of the economy.

Hopes are high for a drop in rates, which can affect how much you pay for your home and the cost of charging Christmas gifts.

Investors have been acting for weeks on expectations for a rate cut, pushing stocks higher and bond yields near two-year lows.

But lower rates can encourage too much spending and borrowing, triggering inflation - the enemy of Fed policymakers. Some economists predict the cautious Fed will take no action until its January meeting.

However, a Bloomberg Business News survey last week found that one out of three Wall Street economists expect the Fed to lower bank borrowing rates for the second time this year. The Fed cut rates July 6 to 5.75 percent.

One reason is the recent slump in new home sales. While 30-year mortgage rates fell to 7.18 percent last week from 9.25 percent in December 1994, sales of new homes haven’t gained since July.

At the same time, the annual inflation rate is 2.6 percent, the lowest in years.

In other events this week:

Today

Teamsters Local 582 enters eighth week of labor strike against Broadview Dairy downtown.

Tuesday

SIRTI conducts orientation of Electronic Data Interchange, the computer-to-computer exchange of business data at 1 p.m. at 665 N. Riverpoint Blvd. Cost: $25. Call Dorothy Hooley at 358-2044.

Commerce Department releases report on housing starts for November and revised Gross Domestic Product figures for the third quarter.

Wednesday

U.S. Bureau of Mines commemorates accomplishments of Spokane employees at 10 a.m. at the bureau’s Spokane Research Center, 315 E. Montgomery Ave. Call Nadine or Linda at 484-1610.

Commerce Department releases international trade figures for October.

Scientists get first look at Galileo Jupiter data.

Thursday

Laura Mathiesen from the Speciality Foods Association discusses marketing in Japan at the Inland Northwest World Trade Council monthly noon luncheon at the Red Lion in the Valley. Cost: $10 for members, $12 non-members. Call 625-6190.

A state private-applicator pesticide license training seminar begins at 8:30 p.m. in the Colfax, Wash., Public Service Building. Call 509-397-6290.

Federal Reserve releases November industrial production figures.

Friday

More than 32,500 Boeing Machinists, including nearly 300 in Spokane, receive strike settlement and year-end bonuses worth on average more than $4,000 each.

Cecil Roberts is sworn in as president of United Mine Workers union Charleston, W.Va.

, DataTimes ILLUSTRATION: Graphic: Aluminum prices

MEMO: This sidebar appeared with the story: ON THE SHELF Forbes, Dec. 18: Labor contracts, grain-shipping rates in Montana and a host of other issues could derail, or at least slow down, the proposed Union Pacific-Southern Pacific rail merger, says Forbes.

Counting costs Changes in consumer prices for select categories during November, as reported by the Labor Department: Fresh vegetables: -6 percent Airline fares: -4 percent Fruit: -1.5 percent Energy: -0.9 percent All food: -0.1 percent Apparel: -0.1 percent New cars: +0.1 percent Services, +0.2 percent Medical care: +0.4 percent Entertainment: +0.5 percent