"We have now had a truly accommodative monetary policy for more than a year," Mr. Duisenberg said after a meeting of the bank's board here today.

Because wartime production needs mandated large budget deficits and an accommodative monetary policy, the outbreak of inflation and a runaway wage-price spiral was seen as a very real possibility.

"Indeed, until there is a definitive slowdown in the pace of economic growth, the bond market will continue to anticipate the next Fed move toward a less accommodative monetary policy."

"But while a more accommodative monetary policy does not appear to be on the horizon, "neither does a tightening.

She stated, "It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system."

But the less "accommodative" policy apparently does not include an increase in the discount rate.

Usual market reaction when Fedspeakers say they are pursuing "an accommodative policy": whee!

A. The strong yen is due 60 percent to overly restrictive monetary policy in Japan and 40 percent to overly accommodative policy in the United States.

The substantial ongoing slack in the labour market and the relatively slow pace of improvement remain important reasons that the committee continues to maintain a highly accommodative monetary policy.

These changes will eliminate the Fed's current incentive to prop up the economy through an accommodative monetary policy to prevent firms from failing.