Fed Raises Rates 1/4 Point - More Possible
A: As generally predicted, Alan Greenspan's last meeting as chairman of the federal reserve ended in another 1/4 point rate hike. This brings the federal funds rate to 4.5%, the highest level in 5 years.
It looks as if Greenspan wants to keep an open platform for Ben Bernanke as he takes over the next fed chief position, by setting an environment ripe for another rate hike. I would estimate current consensus at about 50/50 right now on another rate hike next meeting. I will know more when I see the fed minutes that explains what 'mood' the fed is in and why.
If we do get 1 more rate hike at the next meeting, expect housing to stay cool (flat to down) for at least the remainder of 2006.
Alan Greenspan is arguably one of the most important figures in recent economic history, recognized consistently across the globe. His best moments became clear after-the-fact on how he handled a crisis. No one was better at handling the stressful pressures from both politics and the media that come from being the fed chief. He will be remembered as one of the best and will wind up being the highest paid consultant and public speaker since Bill Clinton. All investors should at least keep an eye on new fed chief Bernanke for the first few meetings to see how he adapts, how he deals with the public on his thinking, and how he handles the next crisis (which very well may be housing).
~ Fed Raises Rates: Another Hike Possible
Add to Newsvine
