At his next-to-last Federal Open Market Committee (FOMC) meeting, Federal Reserve Chairman Alan Greenspan on Nov. 1 voted with nine colleagues to raise the federal funds target rate to 4%, the twelfth increase since June 2004. The target rate had been 3.75%.
"Elevated energy prices and hurricane-related disruptions in economic activity have temporarily depressed output and employment, However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas," the committee said in its post-meeting statement. "With underlying inflation expected to be contained, the committee believes that policy accommodation can be removed at a pace that is likely to be measured," the panel stated.
In other words, expect the FOMC to boost the federal funds target by another 25 basis points to 4.25% at its next session on Dec. 13.
Greenspan's final FOMC meeting is slated for Jan. 31, 2006.