Washington, DC, March 29, 2006As expected, the Federal Open Market Committee raised the benchmark federal funds rate on Tuesday by a quarter of a percentage point, to 4.75 percent, and suggested that at least one more increase was in the cards.
The meeting, the first for Ben Bernanke as chairman of the Federal Reserve, was the stage for the 15th consecutive rate increase.
In its statement describing the decision, the central bank veered little from the Fed's prior assessments of the economy and the expected path of monetary policy, underscoring Bernanke's stated intention to maintain the course set by his predecessor as Fed chairman, Alan Greenspan.
The Fed's statement relied on words nearly identical to those used after the committee's previous meeting in January, Greenspan's last after 18 years as head of the central bank. It said that "some further policy firming may be needed" to keep inflation under wraps.
It pointed out that the economy was growing robustly after a slowdown in the fourth quarter of last year. It noted that core inflation, beyond food and energy, had ticked up only modestly, but it warned that the rising prices of energy and other commodities could add to inflation pressures in the future.
Bernanke is expected to put his own stamp on the central bank eventually. He has long said that he supports more transparency, letting the markets know more clearly how the Fed reaches its decisions and what is the expected path of policy. He has argued in favor of setting a specific inflation target within a range to make explicit the Fed's goals.
