Wednesday, March 29, 2006

Bernanke shows his hand

UPDATE 4-Fed raises U.S. rates, says more may come
By Tim Ahmann (Reuters)

"The message from Bernanke is simple -- that nothing has changed, that the Fed takes inflation just as seriously as under the 'maestro.'"
Chris Low, chief economist at FTN Financial in New York, referring to Bernanke's storied predecessor.

In their first meeting under new chief Ben Bernanke, Federal Reserve officials lifted a key U.S. interest rate a 15th straight time to 4.75 percent and said credit costs may have to go higher still, given inflation risks.

Some analysts had thought policy-makers would suggest that the string of rate hikes dating to June 30, 2004, might be near an end. Instead Bernanke, who took over from Alan Greenspan on Feb. 1, was seen as taking a clear stand against inflation.

"Economic growth has rebounded strongly in the current quarter, but appears likely to moderate to a more sustainable pace," the Fed said. The language offered a bit more information on the outlook than statements had under Greenspan, and some analysts said it suggested a shift under Bernanke toward greater transparency.

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