WASHINGTON - A survey released a day before the Federal Reserve was to decide whether to raise rates showed that a majority of economists believe it has done enough to keep inflation at bay for another six months.
The central bank's Open Market Committee meets today.
More than three-quarters of the economists surveyed by the National Association for Business Economics said the Fed's monetary policy was "about right," a big increase from 62% in the previous survey in February. Only 12% in the current poll said the policy was "too stimulative."
In its twice-yearly economic policy survey, the group polled 185 analysts on monetary and fiscal policy, the current account deficit, and potential threats to the record U.S. economic expansion.
The Fed has raised the key federal funds rate six times since last summer, pushing it to 6.5% - its highest level in over nine years.
"Clearly the Fed's tightening actions since February have calmed the worries of those who thought the central bank was getting 'behind the curve,' " the economist group said.
Fifty-four percent of those polled said the Fed should refrain from further tightening over the next six months - but around the same percentage said they thought the Fed would raise rates anyway.
The Fed's concern over the nation's tight labor market was shared by the economists. Around 86% said the shrinking pool of available workers was at least "somewhat of a threat," while 20% said it is a major threat.
However, another Fed worry - the widening current account deficit - prompted less concern. America's reliance on foreign savings was seen as a threat to the expansion by about 64% of the respondents, while 34% said the current account deficit does not represent any threat.
After labor market concerns, the most pressing problem facing the U.S. economy is the "danger of a stock market bubble/U.S. financial market volatility," the economist group said. Around 22% of those surveyed said that represents the biggest threat.
The survey reflected little change from the previous poll about fiscal policy. Forty-five percent of the economists said federal budget surpluses should be used to pay down the national debt, while 26% said the windfall should go toward tax cuts.
The economists were more united in their desire for increased funding for the government agencies that compile economic statistics. At a time of enormous change in the economy, a House appropriations bill provides no new funds for the Census Bureau or the Bureau of Economic Analysis to improve their measurement programs, the group said.
Two-thirds of those surveyed said Congress should grant the agencies at least as much as President Clinton requested in the fiscal 2001 budget, while 83% wanted an increase in funds to track the new economy.