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Can Congress sway the Fed?
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September 23, 1996: 5:29 p.m. ET
Some lawmakers are trying to influence the Fed's decision on interest rates
From Correspondent Kelli Arena
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WASHINGTON (CNNfn) - When the Federal Reserve Board meets Tuesday to discuss the economy and interest rates, most economists expect the Fed's Open Market Committee will engineer an increase in interest rates.
But some on Capitol Hill argue that current economic conditions don't warrant an increase, and they're sending an unusually strong message to Federal Reserve Chairman Alan Greenspan.
A group of 78 congressman, mostly Democrats, are urging Greenspan to "just say no" to higher interest rates.
"What we're trying to do is demonstrate to the Fed that there is a strong interest in Congress to keep interest rates the way they are…there is no sign of inflation…no reason to raise rates," said Rep. Maurice Hinchey, D-N.Y.
The group argues that a hike in rates is akin to taxing the American people by causing them to pay more money on their loans.
"For the Fed to put its foot on the brakes to slow the economy down will hurt everyone in this country," said Sen. Byron Dorgan, D-N.D.
Lawmakers accuse the Fed of often bending to pressure from Wall Street, when its allegiance should be to Main Street.
Some political analysts, however, suggest the motive is not so pure. Thomas Mann, an analyst at the Brookings Institute, said the upcoming Democratic reelection campaign is a factor. (262K WAV) or (262K AIFF)
Many fed-watchers say members of Congress simply can't influence the central bank's decisions. The Clinton White House, for its part, hasn't even tried. And most experts say that's just the way it should be.
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