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Fed chief briefcase: a sign
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June 29, 1999: 12:07 p.m. ET
Greenspan's briefcase, not the economy, may forecast rate direction
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NEW YORK (CNNfn) - Economists say Alan Greenspan has all but announced his intention to rise interest rates this week.
But while some point to the Fed chief's words about the need to "pre-empt" inflation, others look to his briefcase.
The briefcase theory, as it's whimsically known, holds that the size of Greenspan's briefcase determines whether the nation's top banker wants to raise rates, lower them or leave them unchanged.
If Greenspan wants to alter the direction of interest rates, he will need a briefcase full of documentation to make his case to the Federal Open Market Committee. If he wants to keep interest rates steady, the briefcase will be light.
Recent history supports this hypothesis. The Fed has not moved on rates this year. At the same time, Greenspan's briefcase has been on the light side.
Making the case, in brief, for a rate hike? You decide.
Where does the briefcase theory stand Tuesday?
Tough to say. As Greenspan walked to work on the morning of the Federal Open Market Committee meeting, his satchel appeared neither large nor small, a fitting statement from the source of so much speculation.
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