The Federal Reserve today raised short-term interest rates by 25 basis points to 4.5%, the final open market committee meeting to be chaired by Alan Greenspan. His successor, Ben Bernanke, was confirmed today by the Senate.
While the Fed signaled that future interest-rate increases are not necessarily over, it will weigh actions in light of economic data. "The committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the committee will respond to changes in economic prospects as needed to foster these objectives," according to a Fed statement.
"They're no longer on autopilot ... each time," said James W. Paulsen, CIO at Wells Capital Management. The Fed could raise short-term rates again next month if January job growth data, to be released Feb. 3, comes in stronger than expected, Mr. Paulsen added.