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Bernanke sworn in as 14th Fed chairman
(AP)
Updated: 2006-02-02 08:48
For his part, Greenspan, who wrapped up 18? years as Fed chairman on Tuesday,
was scheduled to be at work Wednesday as well, at his new job — running
Greenspan Associates, a private economic consulting firm he is setting up in
Washington.
Former Federal Reserve Chairman Alan Greenspan
appears on Capitol Hill 24 February, 2004 in Washington, DC. The departure
01 February, 2006 of Greenspan as chairman of the US Federal Reserve turns
the page on what many analysts view as a golden economic era for the
United States. Greenspan, 79, presided over an unprecedented period of
expansion, guiding the world's biggest economy through a stock market
crash in the year he took office, global financial crises, the technology
boom and bust and the September 11, 2001 terrorist attacks.
[AFP] |
Private economists gave Greenspan high marks, not only for the successful way
he handled the economy during his tenure, but also for the smooth transition he
provided for Bernanke.
The Fed’s goal has been to gradually nudge up the federal funds rate, the
interest that banks loan to each other, from 1 percent in 2003, a low going back
more than 40 years, to a neutral level where it is neither stimulating nor
depressing economic growth.
The Fed’s action on Tuesday boosted the funds rate one-quarter percentage
point to 4.5 percent, the highest it has been in nearly five years.
Commercial banks quickly followed suit Tuesday by increasing their prime
rate, the benchmark for millions of consumer and business loans, to 7.5 percent,
also the highest level in nearly five years.
Analysts said if they are correct that the Fed will raise rates only one more
time this year, then the prime will end up at 7.75 percent, still below the 9.5
percent peak the prime hit in 2000 during the Fed’s last credit-tightening
cycle.
Long-term mortgage rates, which are set by financial markets but influenced
by the Fed, are expected to rise by a half-point or so by the end of the year.
That would put the average 30-year mortgage rate, currently at 6.1 percent, at
around 6.6 percent, still low by historical standards.
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