FED WATCHERS SEE U.S. ECONOMIC, INFLATION UPTURN

  This year will see a pickup in U.S.
  economic growth and inflation, the Shadow Open Market Committee
  said in its semi-annual policy statement.
      The SOMC, a group of basically "monetarist" private
  economists, said that "economic growth will accelerate in 1987
  in response to powerful stimulative actions by the Federal
  Reserve."
      The group said the Fed's actions have been excessive. As a
  result, it said that "inflation and ultimately another
  recession now loom on the horizon."
      The SOMC said that central bank policies that rely on
  progressively larger swings in monetary expansion will not lead
  to sustainable economic growth and stable prices.
      The group made no specific nominal forecasts of economic or
  inflation growth in its policy statement. However, the
  Committee at its Sunday policy-making meeting said it was
  basically in accord with projections by Jerry Jordan, who is a
  member of the SOMC and economist at First Interestate Bancorp.
      Jordan expects real GNP growth to be about one percentage
  point higher than in the past two years. He expects consumer
  prices to rise about 4-1/2 pct this year.
      The SOMC said in recent months rapid money growth has been
  a principal cause of the devaluation. To avoid another costly
  inflation and disinflation, the SOMC urged the Fed to "abandon
  its inflationary policy and set the growth rate of the monetary
  base on the path toward sustained lower inflation."
      The Fed in February said it would no longer target the
  narrow M-1 money supply because the link between M-1 and
  economic growth has been largely severed.
  
  

