Politics Entering Fed’s Rate Decisions?

Federal Reserve policy-makers, who staunchly guard their independence, aren’t likely to talk openly about politics during their deliberations this week. But with Chairman Alan Greenspan’s term up next year, the question of interest rates won’t be the only matter on their minds.

Fed officials complete closed-door discussions today with pressure growing to cut rates.

Some private economists argue that the upcoming presidential election and Greenspan’s desire to be reappointed for a third four-year term as chairman next March could well influence the deliberations.

Whatever the Fed decides is likely to be an extremely close call. Some predict an immediate rate cut. Others say the central bank will wait until its August meeting.