Greenspan’s last statement
made only minor changes to the language, which gives Chairman Bernanke (whose
nomination was confirmed overnight) plenty of scope to move. (“The Committee
judges that some further policy firming may be needed…”) Cash rates were
raised by another 25 basis points, as expected.

US monetary policy is now close to the neutral zone
and policy is generally expected to be more “data driven,” to quote one expert.
Recent data has been relatively strong, including jobs growth and consumer

sums up: “The Federal Reserve has raised its key interest
rate by another quarter of a percentage point, to 4.5%, at Alan Greenspan’s last
meeting in charge. His successor, Ben Bernanke, is taking over at or near the
end of a cycle of monetary tightening, and thus may sit on his hands for a
while. But his first big challenge is not far away.”

Read more at Henry Thornton.