BAKERSFIELD, Calif. -- Robert Parry, president of the Federal Reserve Bank of San Francisco, said he does not foresee further interest rate cuts before the presidential election.
"Interest rates have been cut quite a bit. Some time should pass before reaching a conclusion about the need for further cuts," Mr. Parry said last week after a speech to Bakersfield community leaders.
Optimist on the Dollar
In his speech, Mr. Parry defended the Fed's most recent move to reduce interest rates further while the dollar is battered on world currency markets.
Mr. Parry acknowledged that reducing the federal funds rate to 3%, its lowest level in almost 30 years, resulted in further devaluation of the dollar, particularly against the German mark.
"But the domestic economy is the overriding concern, and there are those who believe that the dollar has bottomed out," Mr. Parry said, in which case the dollar is an excellent value for investors.
Projections on Growth
"We believe Germany has about run its course with high interest rates," Mr. Parry said. "Their rates are very high, and we believe they have accomplished what they set out to do, which was deal with their concerns about inflation."
Mr. Parry was pessimistic about third-quarter economic growth. He predicted the third-quarter figure would be closer to the 1.4% of the second quarter than to the 2.9% growth achieved in the first quarter.
He stood by Fed estimates that the economy will grow 3% in 1993.
The lack of economic progress is the result of a number of factors, but the excessive debt of the 1980s has had a major impact, the Fed president said.
"There was a lot of lending in the 1980s," he added. "Bankers and regulators made mistakes. The reluctance of consumers to borrow and banks and regulators to loan has had a major impact" on the recovery.