All eyes turn to Greenspan

13 April 2012

ATTENTION will return to the US economy this week following Friday's lull for former President Ronald Reagan's funeral.

Fresh data should provide further signs of whether Federal Reserve chairman Alan Greenspan is merely going to tap the economic brakes, or slam his foot down.

Retail sales figures are due out today, data on industrial output and housing starts on Wednesday.

Greenspan raised the alarm last week by vowing to do 'what is required' to contain any rise in inflation. A rate rise of at least a quarter-point is expected later this month.

Investors are starting to get worried after a year-long share boom, fuelled in part by a flood of cheap money in America.

Money markets now see US interest rates more than doubling by September, from current historic lows of 1% to 2.25%. They say they may climb to 4.5% by end-2005.

British interest rates are predicted to hit 5% by Christmas.

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