Washington – Federal Reserve policymakers last month indicated interest-rate decisions could become less predictable, relying more heavily on short- term economic prospects than on sweeping monetary strategy.
Minutes of the Fed’s closed- door meeting Jan. 31 – Chairman Alan Greenspan’s last – were released Tuesday and offered insight into policymakers’ thinking as they contemplated what might be the appropriate end point in the Fed’s nearly two-year credit-tightening campaign and as they prepared for the new chief, Ben Bernanke.
“Although the stance of policy seemed close to where it needed to be given the current outlook, some future policy firming might be needed” to keep inflation and the economy on an even keel, according to the minutes.
One of the first challenges facing Bernanke will be to work with his Fed colleagues and decide when to stop boosting rates. If he stops too soon, inflation could get out of hand. If he waits too long, the economy could be hurt.
Bernanke’s first interest-rate meeting is March 27-28. In congressional testimony last week, he hinted that another rate increase could come at that time to help keep inflation in check.
