The Federal Open Market Committee (FOMC), under new chairman Ben S. Bernanke, will raise the influential federal funds rate target at each of its next two meetings and then quit until next spring, predicts Global Insight, an economic forecasting firm based in Waltham, Mass.
In an attempt to calm inflation worries, the FOMC will raise the target rate by 25 basis points (to 4.75%) on March 28 and another 25 basis points (to 5%) on May10, the forecasters state.
"The next move, in the spring of 2007, will be a rate cut to counter the slowdown in real growth and recognize the deceleration in inflation," they say.
