No surprise from the US central bank, the Federal Reserve, over interest rates. The policy setting Open Market Committee again raised the benchmark federal funds rate – the interest that banks charge each other – by another 0.25%. It now stands at 4.25%. It was Fed chairman Alan Greenspan’s penultimate meeting before he retires.
This is the 13th time the Fed has raised interest rates since it began tightening credit in June 2004 when the funds rate stood at one per cent .. its lowest in forty six years. Economists were expecting this rise and are confident there will be another at the end of January, but after that it is more difficult to predict.
Every utterance from Greenspan and his successor, Ben Bernanke, will be dissected to see if there are more rises to come That will depend on how much inflation is deemed to be under control and how the US economy performs over this holiday season.It grew at a healthy 4.3% in the third quarter of the year is forcecast to slow down a bit in the final three months and then pick up again in early 2006.