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INFLATION FEARS ARE UNFOUNDED, PNC BANK ANALYSTS SAY

 PHILADELPHIA, Jan. 7 /PRNewswire/ -- Stronger economic growth has raised fears that inflation will accelerate in 1994, but such fears are unfounded because economic output will be restrained by several forces, investment analysts at PNC Bank Corp. (NYSE: PNC) said today.
 One factor that will curtail growth is continued slow gains in U.S. exports due to sluggishness in the economies of Europe. For example, the most optimistic projection for German economic growth this year is 1 percent.
 In addition to the economic weakness among the industrialized nations, U.S. fiscal policy -- especially higher taxes and declining defense spending -- will restrict growth. A slowdown in the economy during the first half of the year, which the PNC analysts forecast in their January Investment Policy Statement, would mitigate any upward pressure on prices.
 The analysts also noted that ample capacity still exists in the U.S. economy to allow for expanded activity without raising prices. Many companies cannot raise prices, and there is an oversupply of many commodities, such as aluminum, around the world.
 Finally, the growth in the nation's money supply is small, and the Federal Reserve is prepared to raise interest rates if inflation shows signs of exceeding current levels.
 The analysts predicted an inflation rate of 2.5 to 3 percent in 1994.
 As far as the stock market is concerned, the analysts said the outlook for inflation should remain favorable for financial assets in general, and equities in particular, over the long term.
 They added: "With the market priced at approximately 16 times our operating earnings forecast for 1994, and given the outlook for inflation, we believe the broad market is fairly valued."
 PNC Bank is the 11th-largest banking organization in the United States, with assets of $52.3 billion at Sept. 30, 1993, and operates more than 550 community banking offices throughout Pennsylvania, Delaware, Ohio, Kentucky and Indiana. PNC Bank's major lines of business include retail banking, corporate banking, investment management and trust, and investment banking.
 PNC Bank Corp. operates as PNC Bank in Pennsylvania, Kentucky, Ohio and Indiana. Bank of Delaware will change its name to PNC Bank early in 1994. PNC Bank Corp. is headquartered in Pittsburgh.
 /delval/
 -0- 1/7/94
 /CONTACT: Linda Wolohan of PNC Bank Investment Management Research, 215-585-5265/
 (PNC)


CO: PNC Bank Corp. ST: Pennsylvania IN: FIN SU: ECO

MK-MJ -- PH007 -- 0178 01/07/94 13:16 EST
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Publication:PR Newswire
Date:Jan 7, 1994
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