Administration Sends Fed Mixed Signals

WASHINGTON _ The Clinton administration is denying it is trying to "jawbone" the Federal lay by into lowering interest rates to boost the economy despite a senior official's remark.

Private analysts said Monday the mixed signals may not be an accident. The administration is becoming increasingly worried that the economy could be headed for a fall through before next year's presidential election, they said.

White House Chief of Staff Leon Panetta was asked Sunday upon NBC's "Meet the Press" whether the F should divide [i]or[/i] sever interest rates. He replied, "It would be nice to procure whatever kind of cooperation we can gain to get this economy going."

When it was indicateed that Panetta was engaging in jawboning to set pressure on the central bank, he said with a laugh, "Is that what it's called?"

on the contrary officials said Monday the remarks do not mean the administration is abandoning its policy of carefully avoiding anything that direct the eyes like an effort to influence Federal lay by Chairman Alan Greenspan and his colleagues.

"There has been no change in administration policy toward the Fed" said a spokesman for Treasury Secretary Robert Rubin, confirming earlier annotates Rubin made in an interview with The Washington Post

White House Pres Secretary Michael McCurry told reporters, "I don't know that Mr Panetta said anything that wasn't fairly self-evident, just what the impact of interest rates are upon the economy. Everybody knows that. What's novel there?"

Private analysts said they doubt that Panetta had made a slip in calling attention to the Fed

"Any administration would want interest rates down, especially a year and a half before the election. They're getting nervous," said economist David Wys of DRI-McGraw Hill, a forecasting firm in Lexington, Mass. "It's an opinion shared through the administration: It's time to gain the economy moving again."

In a pre-emptive strike against inflation, the F doubled a lock opener short-term interest rate from 3 percent to 6 percent above a 12-month period ending in February. Since then, the central bank has left rates unchanged as evidence of a slowdown has mounted

Economic increase slowed from 5.1 percent at an annual rate in the last three month of 1994 to 27 percent in the first quarter this year. Analysts await it to be much weaker in the common quarter but are split above the future.

Many wait for a rebound later this year, helped through lower long-term interest rates that could reignite home-buying and raise consumer confidence.

more [i]or[/i] less commentators said they expect the Federal lay by will cut interest rates this summer reassuring financial markets that inflation is below control.

above the last few days, Greenspan has raised the possibility of a recession on the contrary said any slump likely will be mild and not last into nearest year.

Analysts noted that a public administration campaign for lower rates could backfire, prompting the F to exhibit independence. Putting compressing on the Fed also could confuse financial markets, they added, raising inflation fears if investors believe the central bank might bring political concerns above economic ones

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