NEW YORK Reuter: West Germany and Japan are likely to reduce their interest rates in response to the Reagan administrations continued appeals the New York Times quoted senior U.S Economic Policy Officials as saying.
With lower rates Japanese and German consumers and businesses can borrow to buy more cars homes and machinery giving their economies a boost the Times said.
“The administration maintains that faster growth in those countries would spill over into the United States with rising demand for the goods that American companies export enhancing their profits id the appeal of their stocks to investors.
Other economists argue that last week’s stock market plunge resulted from bigger problems than other countries reluctance to lower their interest rates it said.
“They attribute the (markets) weakness to the difficulties in Congress and the administration over reducing a federal budget deficit that is climbing toward another record this year” the Times said.
“The high budget deficit requires increased borrowing by the federal government which helps keep interest rates higher in relationship to inflation than they have been historically”.
Article extracted from this publication >> September 19, 1986
