While a better-behaved inflation report lifted municipals Friday, one economist warned that a tightening of monetary policy expected this week could hurt public coffers in the New York metropolitan area over time.

"What oil used to be to Texas, interest rates are to New York," said John Lonski, a senior economist at Moody's Investors Service. What happens to interest rates, and consequently to the financial services sector, "is of the utmost importance," he said.

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