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Soros Sees a 'Fairly Good Recovery' Next Year

Economy: Billionaire investor expects steep fourth-quarter decline, then a comeback in 2002.

October 15, 2001|From Bloomberg News

BUDAPEST — Hungarian-born billionaire investor George Soros said he expects the U.S. economy to make a "fairly good recovery" next year.

"We'll see a rather steep decline in the fourth quarter and probably a fairly good recovery next year," said Soros, in Budapest to announce his $250-million endowment to Central European University.

Soros said he approved of the U.S. Federal Reserve's interest rate cuts and the government's fiscal package to spur the economy, though he added that some tax cuts threaten to drive up long-term interest rates and put the budget into deficit.

The tax cuts, "with the new stimulus plus the economic slowdown, may push the balance into deficit in later years," he said. "That is having an effect on long-term interest rates and that threatens the recovery. Some of the tax cuts should be repealed."

This month Federal Reserve policymakers reduced the benchmark U.S. interest rate for a ninth time this year to its lowest in four decades to boost business and consumer spending. The target rate for overnight loans between banks was lowered a half percentage point to 2.5%.

Soros founded Central European University in 1991 as a postgraduate institution where students from the region can study democracy, human rights and social sciences. Today's endowment brings his total donations to the university to about $500 million.

He is considering establishing sister institutions in Warsaw and in China, he said.

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