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Heads up

Era of Greenspan comes to close at Federal Reserve

By Times Staff Writer
Published January 30, 2006

Tuesday is Alan Greenspan's swan song as chairman of the Federal Reserve Board. One of his last duties will be presiding over what's expected to be yet another quarter-point increase in short-term interest rates.

From here on out, all eyes will be on the new chairman, Ben Bernanke. On Wall Street the expectation is that Bernanke will be an inflation fighter who will want to raise rates at least a time or two more this year.

However, he may not do that at his first opportunity, which will be March 28. A pause in the rate hikes would give Bernanke and the Fed governors more time to evaluate how much additional tightening is needed. The red-hot housing sector already shows signs of cooling, so the economy could be slowing on its own.

More clues about Bernanke's intentions may come Feb. 15, when he is scheduled to present an economic report card to Congress.

Greenspan's final meeting marks the end of a remarkable era. He took office in 1987, the year the nation faced the largest one-day stock market drop in its history. Since then he has been the steadying hand at the helm of the nation's economy.

[Last modified January 26, 2006, 18:41:01]

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