Interest rates too high but economy healthy: Clinton

Interest rates too high but economy healthy: Clinton

CLEVELAND, Ohio (AFP): President Bill Clinton said that interest rates were too high and would likely come down, as a top economic advisor touted the strength of the U.S. economy.

After the Dow Jones index of 30 leading industrials closed at 3,593.35, down 42.61 points (1.17 percent), the U.S. president asked investors Monday not to overreact, saying the U.S. economy was basically healthy.

Asked about interest rates in an interview with local television, Clinton said, "I think they're too high. I think they'll come back down."

The president was in Ohio to throw out the ceremonial first ball for the Cleveland Indians baseball team.

Referring to Wall Street's downward turn in the past week, the president said, "I think there was an overreaction in the markets when the Fed (Federal Reserve) raised the short-term interest rates a little bit."

"I think that a lot of people have thought for some time that the stock markets were somehow overvalued," he said. "The underlying fundamentals are sound. There is slow inflation and creation of jobs at a rapid rate."

The market seemed to be reacting to news of better than expected job creation in March -- 456,000 against a forecast of 250,000 -- that may indicate a spurt in the economy, and fuel fears that inflation could soon follow.

The first administration official to take to the airwaves as share prices slid Monday and 30-year Treasury bond rates rose to 7.41 percent was Laura D'Andrea Tyson, chair of the council of economic advisors.

"So far the evidence on inflation is very good surprisingly good," she said in an interview from Washington on Cable News Network. "We want to make sure that people understand the reading of the economy. ... The good news is there."

"Markets are volatile (and) difficult to predict," she said.

The president echoed his advisor, saying, "I would encourage the American people not to overreact. I don't think there is any reason to be worried about the long-term health of the economy."

Tyson ruled out any differences of opinion between the White House and Federal Reserve, despite administration criticisms of the Fed's February 4 decision to raise a key rate by one-quarter point to 3.25 percent on Feb. 4.

The interbank lending rate was raised again to 3.5 percent on March 22 as part of an effort by Federal Reserve Chairman Alan Greenspan to head off an inflationary surge that would knock accompanying the economic boom off track.