In its accompanying statement, the policymaking Federal Open Market Committee said “some further policy firming may be needed” to keep the outlook for sustainable growth and price stability in balance.

The committee appeared to dismiss fears about weak growth, saying: “Although recent economic data have been uneven, the expansion in economic activity appears solid.”

Maintaining its focus on inflation risks, it repeated the language from its December statement that while whole core inflation had stayed low and inflation expectations were contained, “possible increases in resource utilisation as well as elevated energy prices have the potential to add to inflation pressures”.

Ben Bernanke, Mr Greenspan’s successor, will take over as Fed chairman today.

By changing the language in its statement, Fed policymakers were attempting to avoid the impression of committing Mr Bernanke to further increases, while signalling that more rate increases remained likely.

Yesterday’s was the 14th consecutive increase since June 2004 and brought the federal funds rate to 4.5 per cent. Futures markets suggest a high probability of another rise at the first meeting Mr Bernanke will chair in March.

During Mr Greenspan’s 18½ years at the Fed, he has chaired 155 FOMC meetings. Over the period, growth and inflation have averaged 3.1 per cent.

2 Responses