Interest rate remarks clarified

By Jeannine Aversa
Associated Press

WASHINGTON — Treasury secretaries are often reluctant to talk about the direction of interest rates. So when Secretary John Snow said rates probably would be moving higher, his remarks sent the administration scurrying to clarify that he wasn't trying to tell Federal Reserve Chairman Alan Greenspan how to do his job.

With the economy showing signs of gaining momentum, "I'd be frustrated and concerned if there were not some upward movement" in interest rates, Snow said in an interview that appeared yesterday in The Times newspaper in London.

Rob Nichols, Treasury Department spokesman, said Snow was not trying to forecast what the Federal Reserve would be doing with short-term interest rates in the coming months, but rather discussing a widely held view among economists that stronger economic growth will send longer-term rates — such as for mortgages and bonds — higher.

Traditionally, Treasury secretaries don't comment on interest rates set by the Fed so as to avoid raising concerns in financial markets that the central bank's monetary policies are being influenced by political pressures.

"The secretary respects the independence of the Federal Reserve in making decisions about our nation's monetary policy," Nichols said.