labels: economy - general
US Fed hints at future rate increase news
04 January 2007

The US Federal Reserve has hinted at the possibility of further interest rate hikes to keep inflation in check. At its December meeting, the Fed had voted to hold the rates at 5.25 per cent for the fourth time in a row.

The Fed was equally concerned about the likelihood of a slowdown in the housing market. According to analysts, the Fed is waiting for a clearer picture of both the US economy and future inflation risk.

Though the subdued tone of some monthly indicators showed that the downside risks to economic growth in the short term had increased a little, the larger concern for the Fed is the risk of inflation failing to moderate as desired .

In a statement accompanying its rates decision last month, the Fed had left the door open for further rises to rein in inflation should it be needed.

Despite the latest data, manufacturing activity remains weaker than in recent years, the once-buoyant housing market has cooled markedly and consumer spending remains a concern despite a small increase towards the end of the year.

According to the notes of the meeting all but one of the 12-member committee voted to leave rates on hold for the fourth time in a row after 18 successive rises.

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US Fed hints at future rate increase