The Money Markets

This sideways movement of money market interest rates reflects a standoff of opposing forces. On the one hand, the high rate of money growth has made the Federal Reserve reluctant to press interest rates down further; and the market, understanding both the Fed's reluctance and the danger that high money growth will lead to upward pressures on the inflation rate, has also been reluctant to push interest rates down. On the other hand, a number of policy concerns have been pointing in the direction of holding interest rates down. Concern over slow growth of economic activity and the effects of higher interest rates on activity have suggested to the market that the Federal Reserve would be unlikely to permit rates to rise to any appreciable extent. Moreover, certain sectors of the economy -- notably agriculture and manufacturing industries suffering from intense import competition -- have appeared especially vulnerable to higher interest rates. Higher rates would have the direct effect of raising costs as seen by individua