Fed Boosts Key Interest Rate to 4.75%
A: The Fed raised the fed funds rate by 1/4 point bringing it to 4.75% and marking the 15th consecutive rate hike by the Federal Reserve Board of Governors. More importantly, I do not see any noticeable change in the issued statement that would lead me to think the rate hikes are over; at least for now.
The rate hike of 1/4 point is not a surprise. The unchanged statement is not a surprise either. Its difficult to argue that Bernanke right now is finishing what Mr. Greenspan started. I talked about this in previous posts and if you look at the article on Yahoo Finance today you will see...
Bernanke has emphasized since being chosen by President Bush to succeed Greenspan that he planned to continue Greenspan's approach toward setting interest rates. That approach was characterized by small baby-steps aimed at giving markets and investors plenty of time to adjust.
It's the right play. Not that he should be listening to me or anything but think about it, it just makes sense with everything going on in the world today. Also lets not forget that Bernanke is taking over for a guy who just sold his memoirs book rights for $8,500,000.00! He knows whats up and Bernanke is just finishing up his work.
According to the article:
In its statement, the Fed sounded at an upbeat note about the current business climate, saying "economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace."The statement retained language used last time that "some further policy firming may be needed." That language is seen by financial markets as signal that further rate hikes could occur.
What To Expect: AT LEAST 1 more rate hike at the next meeting and I'm leaning towards a 2nd rate hike after that. WHY YOU ASK? Because Bernanke will most likely change his tone in the issued statement which will advise the street and tradable markets that we have 1 last rate hike ahead of us. Since it didn't happen with today's statement I'm thinking it could happen at the next meeting.
~ Fed Boosts Key Interest Rate for 15th Time
