Even as the economy gathers momentum, the Fed chief added, inflation should "continue to ease off."

The fund said the world's economy was gathering steam, however, and would grow by a healthy 3.6 percent next year.

Still, analysts said they expected the job market to improve slowly in 1993 as the economy gathers steam.

"Sooner or later, as the economy gathers momentum and gets stronger, an adjustment will have to be made" in rates, he said.

But other indicators pointed to evidence that the economy might be gathering some strength again.

Durable-goods orders should be growing as the economy gathers steam.

One reason the yen has strengthened so quickly in the last three months is that the economy has gathered steam.

The economy has gathered additional pace, and income from taxation has increased.

The Fed kept policy expansive in 1992 and 1993 at the very moment, hindsight shows, when the economy was gathering steam.

If the whole crop were consumed the economy would deteriorate to hunting and gathering the next season.