The funds rate is also the means by which the Fed can most easily tighten or loosen credit.

In 1987, the economy was so strong that the Fed felt a need to tighten credit.

But the situation could be worse if the Fed tightens credit too severely, he added.

Banks are not the only lenders tightening credit in these hard times.

Until several weeks ago, many analysts thought the Fed might tighten credit at its meeting this week.

But they indicated that they were ready to tighten credit if necessary.

To fight inflation, the Fed should tighten credit and push up interest rates.

It is an automatic process that does not depend on Fed action to tighten credit.

Any move by the central bank to tighten or loosen credit has an impact most immediately on the short end of the Treasury market.

But some analysts doubt that the Fed needs to tighten credit immediately.