Chairman Alan Greenspan and the other voting members of the Federal Open Market Committee (FOMC) are virtually certain to raise the federal funds target rate by 25 basis points to 3.5%. And then, unless economic conditions dictate a different tack, the FOMC is likely to raise the target rate by 25 basis points at each of its three remaining meetings this year: Sept. 20, Nov. and Dec. 13. That would put the federal funds target rate, the interest banks charge each other on overnight loans, at 4.25% at year end.
When will the FOMC stop raising the target rate? Probably not before next summer.