Washington, DC, February 1, 2006—The Federal Reserve raised interest rates a 14th straight time, suggesting a 19-month campaign was near an end while saying higher borrowing costs may yet be needed.
Meeting on the final day of Chairman Alan Greenspan's 18-1/2 year tenure, the U.S. central bank's Federal Open Market Committee voted unanimously to lift the benchmark federal funds rate target a quarter-percentage point to 4.5 percent, the highest since April 2001.
The statement that outlined the Fed's decision altered its guidance about the future rate course, leaving the door open for Greenspan's successor, Ben Bernanke, to either raise rates again or choose to call a halt.
The Senate on Tuesday confirmed Bernanke to take the Fed's top job on February 1.
The Fed said further increases "may" be needed, a downshift from a December forecast that higher rates were "likely." The long-standing pledge of "measured" rate rises also vanished from the statement.
"Although recent economic data have been uneven, the expansion in economic activity appears solid," the Fed said in its statement.
"Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained," the central bank added, while repeating a warning that higher energy prices and tight labor markets "have the potential to add to inflation pressures."
