WASHINGTON - Rep. Henry B. Gonzalez, the House Banking Committee's senior Democrat, blasted the Federal Reserve for keeping short-term interest high and said it should lower rates immediately.

"Surprise, surprise," the Texas Democrat said. "Doubling short-term interest rates in 12 months did not produce the bright, sunny days the Fed saw in its crystal ball. The Fed should not wait until its July meeting to reduce short-term rates. They can and should act now."

However, recently released minutes from the March meeting of the Federal Open Market Committee - the central bank's chief policymaking body - show that the Fed is still worried about inflation, economists said.

"I am very encouraged that the Fed is sustaining its long-term policy of resisting inflation over time," said Eugene Sherman, an analyst with M.A. Schapiro & Co. "That's why it is more interesting then your typical FOMC meetings."

The March minutes, which were released Friday afternoon after last week's meeting, indicate that the Fed knew the economy was weaker than most realized. Still, the Fed decided to maintain its anti-inflationary stance.

Mr. Sherman noted that President Clinton's two appointees - Alan Blinder and Janet Yellen - both voted with the rest of the open market committee to keep the inflation battle going. That should resolve fears that the two are doves on the inflation front, he said.

Rep. Gonzalez, however, said the Fed "should stop taking its cues from the long-term bond market" and begin worrying about the possibility of a recession.

"An economic downturn will be devastating to the nation's workers, who have seen their real earnings fall," he said.

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