28 March 2006, 10:54  U.S. rate rise on tap as Fed feels its way ahead

In their first gathering under new chairman Ben Bernanke, Federal Reserve officials look set to raise U.S. interest rates on Tuesday for a 15th straight time and could hint they see the increase as among the last. Analysts are united in the expectation that the U.S. central bank will lift benchmark overnight lending rates a quarter-percentage point to 4.75 percent in the latest step in a campaign to keep inflation at bay. The central bank is expected to announce its rate decision around 2:15 p.m. (1915 GMT). While the course of rates was clear when the Fed began to lift borrowing costs in June 2004 from 1 percent, it has become less certain with each successive step. The economy is growing solidly but the housing market is cooling and wage growth has yet to accelerate. Economists say overnight rates are now in a range that could be considered "neutral" -- neither spurring nor weighing on economic activity -- and Bernanke and his colleagues face the delicate task of deciding when enough is enough. The increasing uncertainty about what lies ahead will lead analysts to dissect the announcement at the end of the Fed's two-day meeting with particular care. Economists are also keen to see whether Bernanke, a champion of central bank transparency who took over for long-serving Fed chief Alan Greenspan on Feb. 1, thinks it worthwhile to tweak the central bank's message.

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