Stop waiting for interest rates to fall further.

So advises, James E. Glassman, a Wall Street economist who regards the current level of rates as "a small price to pay for healthy economic activity."

The Federal Reserve declined to cut rates last week because it has virtually no reason to do so, said Mr. Glassman, senior economist at Chemical Securities Inc., New York.

"The real (inflation-adjusted) federal funds rate is higher than the historical average because the economy is stronger than average," he said in his firm's regular publication, Market Perspectives.

The economy, he said, "has rebounded to the highest level of employment that is possible without overheating and pushing inflation higher, thanks to the Fed's timely rate hikes last year."

In an interview, Mr. Glassman also emphasized that it was probably wrong to think that "if Congress can just get the federal budget deficit fixed, we can have bond yields in the fives."

Any relief from high real interest rates "has to come from a favorable change in the balance between the ultimate sources and uses of savings," he said. And that seems improbable.

Real rates might well decline if household savings rates rose, after being low for more than a decade, he said. But "rapidly appreciating financial assets are inflating wealth and giving many households little reason to save," he said.

The credit markets may get some help this winter from deficit reduction by Congress, but Mr. Glassman ultimately expects disappointment.

In the longer run, expanding business opportunities and growing business investment globally "will be intensifying pressures on credit markets," he said.

With household savers uncooperative, "business investment needs over the balance of the decade are likely to place greater demands on capital resources than Congress can free up by shrinking the deficit over seven years," he said.

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