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'Business Week' Reporter Interprets 'Green-Speak,' Following Greenspan Address to Congress

Aired February 28, 2001 - 1:02 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

NATALIE ALLEN, CNN ANCHOR: What does all this mean for interest rates, and what does it mean to you?

For that, we're joined by Margaret Popper, in New York. She writes about the Federal Reserve and the markets for "Business Week" online.

Hello, Ms. Popper.

MARGARET POPPER, "BUSINESS WEEK": Hi.

ALLEN: And of course, that means you're an expert in Green- speak, we hope as well. What did he say today that lets us know what the future is about interest rates and how that could affect all of us who might be spending a little bit of money?

POPPER: Well, I think that what's pretty clear is that the Fed is not going to do another interim cut, and frankly I think most people, most economists, were not expecting him to indicate that he would. He's clearly still on a loosening bias, and I think that, come the end of March, he will cut rates again.

What's interesting to me is that the stock market appeared to have priced on an interim cut, and so right now, you're seeing a little bit of a dip as people react to the fact that they -- we're not going to get instant gratification from Alan Greenspan.

ALLEN: Right, because some had said that he might take action this week. That's not going to happen, you don't think?

POPPER: No, and I don't think that's ever been the way that Greenspan has operated. In fact, I think the unusual cut was the cut January 3rd, which was an interim cut, and I think that -- you know, there is a lot of rumors bandied about whether that was in reaction to some subtle something that was going on in the market that he was trying to cover up and that we'll now never know about, because he acted so quickly, or if it was the Fed waking up to the fact that the economy had indeed slowed considerably and maybe faster than they had been hoping for through their tightening cycle.

ALLEN: Well, he said that the banks, two rate cuts earlier this year, haven't done enough to spur the economy. Do you think this next cut, when it comes, will have an impact? POPPER: It takes a long time to find out how the -- how these cuts actually do impact the economy. It's at least six months, usually more like nine months, and can take a whole year, before a rate cut trickles through the economy and consumers seriously feel it. Obviously, it is affecting mortgage rates in the short-term, and that's good news for the consumer. But I don't think that we will really know for quite a while.

ALLEN: Margaret Popper -- thanks, Margaret.

POPPER: Thank you.

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