WASHINGTON -- Treasury Secretary Lloyd Bentsen said yesterday he hopes interest rates will remain stable while the company continues to expand at a solid pace.

"I think interest rates have stabilized for the present," Bentsen told reporters. Bentsen, who meets weekly with Federal Reserve Chairman Alan Greenspan, added that he believes "Fed officials have sent a signal that they have reached a neutral position" on monetary policy.

Bentsen predicted that the economy will expand between 3% and 3.5% this year, above the administration's official forecast of 3% growth in gross domestic product.

But he said this year's increases in long-term rates appear to be putting a dent in housing and other interest-rate-sensitive sectors such as automobiles, and he cautioned that further rate increases "would have a contractionary effect" on the economy.

Bentsen said inflation is "well contained." Asked whether the 6% unemployment rate is likely to start generating wage pressures, Bentsen said, "We see no indication of that at this point." Unit labor costs, he said, are "staying virtually constant."

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