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Page 8 BLACK HILLS PIONEER Tuesday, March 16, 2010 Fed weighs how and when to signal higher rates WASHINGTON (AP) — Debate is heating up within the Federal Reserve over how and when to signal that the days of record-low interest rates are numbered. A rate hike isn't imminent. But at their meeting, which started Tuesday morning, Federal Reserve Chairman Ben Bernanke and his colleagues will likely focus on how to telegraph that higher rates are coming once the economic recovery is more deeply rooted. Eventually, Fed policymakers will need to start bumping up rates to head off inflation. It will be a challenging maneuver. Fed officials will want to signal a move to higher rates in advance so borrowers and investors aren't jarred. And they will need to send a signal that isn't confusing. The Fed has held rates at a record low near zero since December 2008. Bernanke and other Fed officials have said low rates are still needed to underpin economic growth. But they need to decide whether to keep or modify their yearlong pledge to hold rates at record lows for an Xextended period.X Economists generally think Xextended periodX means at least six more months. The Fed could drop that commitment altogether. Or it could pledge to keep rates low only for Xsome timeX or vow to keep Xpolicy accommodative.X Or it could change its language in some other way to HEALTH CARE !ontin&e( *ro, Pa/e 0 Another lawmaker who opposed the legislation last year, Rep. Dennis Zucinich, D-Ohio, flew with Obama on Air Force One to an Obama appearance in Zucinich's district Monday. Zucinich, was against the bill because he wants a larger government role in health care, also is not ruling out voting XyesX this time. With a number of anti-abortion Democrats expected to defect over provisions they contend allow federal funding of abortion, every vote will count for Democratic leaders, who need to win over lawmakers who opposed the legislation the first time ` and keep reluctant supporters on board in the face of escalating attacks. Sweetening the pot, those who vote with the president may get more help from him in the future: Party officials said that in determining how to allocate Obama's time for campaign stops or other events, a vote on something like health care would be a consideration. House Democrats triggered the countdown Monday for the climactic vote, with the House Budget Committee agree- stress that credit will be tightened when the time is right. Any such step would signal that the days of easy money are fading. Inside the Fed, debate is intensifying. Thomas Hoenig, president of the Federal Reserve Bank of Zansas City, has pushed to change the signal. At the Fed's last meeting in late January, Hoenig dissented from the Xextended periodX pledge. He favored saying rates would stay low for Xsome time.X He thought that would give the Fed more flexibility to start raising rates. Some economists aren't ruling out a change in language at Tuesday's meeting. An afternoon announcement is expected. Others don't think a change will come until the Fed's next meeting on April 27-28. XDuring the Depression, the Fed tightened policy too soon and cut off the recovery before it was self-sufficient,X said Joel Naroff, president of Naroff Economic Advisors. XThe Fed doesn't want to make that mistake again. I think “During the Depression the Fed tightened policy too soon and cut off the recovery before it was self-sufficient. The Fed doesn’t want to make that mistake again.” Joel Naroff, President of Naroff Economic Advisors that they are willing to stay with very easy money longer than they might normally because of all the damage that has been done to the economy.X The recession wiped out 8.4 million jobs. And with companies still wary of ramping up hiring, the unemployment rate — now at 9.7 percent — is likely to stay high. Even though the jobless rate hasn't budged for two months and companies aren't cutting as many jobs as they did a year ago, hiring is tepid. Consumer and business spending is sufficient to keep the economy growing only modestly. Lending remains tight. And, the housing and commercial real-estate markets are wobbly. A government report out Tuesday showed that housing construction tumbled in February as snowstorms held back activity in some parts of the country. XCautiously optimistic is where the Fed is right now,X said William Cheney, chief economist at John Hancock. XBut it is heavy on the caution and light on the opti- ing 21-16 to fast-track rules for the health bill, a necessary first step before floor action. Even so, the legislation remained incomplete. House Democrats caucused Monday evening, and a number of rank-and-file lawmakers straggled out discouraged that they still didn't have final legislative language or a cost estimate from the Congressional Budget Office. Leaders hope to get both those things Tuesday. Until then there's only so much they can do to pin down wavering lawmakers who will soon be asked to make one of the riskiest votes of their careers. XThere's no decision yet on what the process is going to be, there's nothing back from the CBO, there's no commitment yet from the Senate that they can get 51 votes, and there's no bill to show me what it's in it,X said Rep. Dina Titus, D-Nev., a freshman who voted XyesX last year and has been targeted by Republicans. XSo until those things get resolved I'm staying uncommitted.X Democratic leaders sounded notes of optimism anyway. XWhen we bring the bill to the floor, then we will have the votes,X said Speaker Nancy Pelosi, D-Calif. Obama said in an interview with ABC News: XI believe mism.X That helps explain why the Fed is expected to keep its key rate at a record low Tuesday. It has held its target range for its bank lending rate at zero to 0.25 percent since December 2008. In response, commercial banks' prime lending rate, used to peg rates on certain credit cards and consumer loans, has remained about 3.25 percent ` its lowest in decades. Super-low rates benefit borrowers who qualify for loans and are willing to take on more debt. But they hurt savers. Low rates are especially hard on people living on fixed incomes who are earning measly returns on savings accounts and certificates of deposit. The Fed could start boosting rates as early as June ` if economic growth accelerated. A more likely time is this fall, economists say. Investors also will be looking to see if the Fed makes any changes to an economic-support program that's lowered mortgage rates and bolstered the housing market. Under that program, the Fed is scheduled to end its mortgage-securities purchases from Fannie Mae and Freddie Mac at the end of this month. Some analysts fear that once the program ends, mortgage rates could rise. That could weaken the recovery in housing and the overall economy. The Fed has left the we're going to get the votes. We're going to make this happen.X In order to avoid a Republican filibuster in the Senate, the House will be voting to approve the Senate's health overhaul bill, along with a package of fixes to change things House Democrats didn't like, such as a tax on high-value insurance plans. That fix-it package can pass the Senate with a simple majority, a necessary approach because Republicans are unanimously opposed and Democrats control only 59 Senate votes, one short of the 60 needed to block a filibuster. A complicated procedure is being contemplated for the House floor, too, one that would shield lawmakers from having to vote directly on the Senate bill, allowing them to instead approve a rule for debate that would deem the Senate bill passed once the fix-it bill has passed. Outside interests on both sides turned up the heat. Union groups and other supporters announced a $1.3 million advertising campaign urging 17 House Democrats to vote for the measure, and officials at the Service Employees See HEALTH CARE — Page 31 M"## %&'( )*W#,-,*(. Carrier delivery of your newspaper should arrive at your address by 5:00 p.m. Monday through Friday, and by 7:00 a.m. Saturday mornings. If you do not receive your newspaper by these times, please leave a message at... /0121459 7#pearfish@ or /0121414 7BeadD DeadFood@
Tuesday, March 16, 2010 BLACK HILLS PIONEER Page 9 • Chinatown Café, Deadwood - Two entrees - Value $40 - $30 • James Photography, Spearfish -Portrait certificates – Value $100 - $50 • Gradinaru’s Haus of Kaffee, Lead - Value $20 - $14 • Posy Palace Florist, Belle Fourche - Value $25 - $18 • Maddison’s Styling Salon, Spearfish - Partial Foil with Tarren Pochop - Value $48 - $30 • Maddison’s Styling Salon, Spearfish - Reconditioning Service with Pat Colleran - Value $25 - $15 • Maddison’s Styling Salon, Spearfish - Set of Acrylic Nails with Kayla McCarty - Value $50 - $35 • Pump House Coffee & Deli, Deadwood - Value $25 - $15 • Shankar Jewelry, Deadwood - Value $25 - $18 • Curves, Spearfish - 2 month memberships - Value $99 - $50 • Ranek’s Gym, Spearfish - 6 Months single fitness membership - Value $200 - $100 • Midnight Star - Jakes or Diamond Lil’s, Deadwood - Value $100 - $70 • Unique Boutique, Sturgis - Value $20 - $10 • A Step Ahead Foot Care, Spearfish - Value $20 - $10 • Golden Hills, Lead – one night stay in premium room - Value $99 - $55 • Bay Leaf Café, Spearfish - Value $20 - $14 • Recreational Springs, Lead - One day snowmobile rental - Value $140 - $70 • Recreational Springs, Lead - Restaurant - Value $25 - $14 • Taco John’s, Deadwood - Value $20 - $14 • Taco John’s, Spearfish - Value $25 - $18 • The Butcher Shop, Spearfish - Value $20 - $14 • Millstone Family Restaurant, Spearfish - Value $20 - $14 • Spearfish Canyon Outpost, Spearfish - Value $25 - $15 • Sturgis Photo and Gifts, Sturgis - Value $100 - $50 • Good As Gold Gifts and Antiques, Lead - Value $25 - $13 • PaPa Murphy’s, Spearfish - Value $20 - $14 • Recreation Station, Spearfish - Value $25 - $13 • Black Hills Portraits, Spearfish - Value $50 - $25 • Quality Inn, overnight stay in poolside room, Rapid City - Value $100 - $50 • Arnolds Classic Diner, Rapid City - Value $20 - $14 • Boston’s Restaurant, Rapid City - Value $25 - $18 • Subway, Spearfish - Value $20 - $15
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'This is my corner'

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