Greenspan Goes Out With AHike

WASHINGTON - (02/01/06) -- The Open Market Committee of theFederal Reserve in Chairman Alan Greenspan's final meeting voted tolift the benchmark federal funds rate for overnight funds again by25 basis points to 4.5%, its 14th straight 25 bp increase sinceJune 2004. But the Fed moderated its tone in announcing the movemaking it clear that incoming Fed Chairman Ben Bernanke haslatitude to lift or cut rates in the future. "He's definitelyhanding it off to Bernanke, in the sense that they haven'ttelegraphed that they will go higher or lower," said Jeff Taylor,senior economist for NAFCU. "This allows him to shape things forhimself." Taylor said he expects the short-term target to go higherstill, probably to 5% before the Fed decides to moderate its policyaimed at tamping inflation and unemployment. The rising short-termrates, said Taylor, will add increasing pressure on credit unionsto lift their regular share rates, which have remained mired below1% for two years. "They're going to have to go higher," he told TheCredit Union Journal.