Greenspan bids adieu with another rate increase

Greenspan bids adieu with another rate increase
WASHINGTON - Alan Greenspan bid adieu to his tenure as the chairman of the Federal Reserve with a 14th quarter-point increase in the interest rtes in the last 19 months. However stocks closed lower on the Wall Street since the Fed has not indicated exactly when these rate increases will be halted.

The Fed did hint that another rate increase was possible, though there was no clear indication in any direction. Just after this announcement, the US Senate approved the nomination of Ben Bernanke as Greenspan's successor and the 14th chairman of the central bank.

The 52-year-old Bernanke will be sworn in today morning at the Fed's headquarters. Greenspan served as the Fed chairman for 18 ½ years and chaired his 1,124th Fed meeting during this period. It was also the 149th meeting of the Federal Open Market Committee (FOMC).

This is the panel that sets the rates eight times in a year. The interest rates now stand at a record 4.50 percent. As a farewell gift, Greenspan was given a baseball glove signed by various bank presidents as well as the flag that flew over the headquarters on Tuesday.

Greenspan then spoke to the 1,500 employees in the Fed an urged them to protect the currency against being devalued by the inflation, "We have a very special mission. We are in charge of the nation's currency, and the central bank, because of that, is involved in everyone's daily lives. We are the guardians of their purchasing power," he said. Greenspan will now concentrate on his private firm Greenspan Associates based in Washington.

While increasing the interest rates, the Fed said that the inflation remained a cause for concern, "Elevated energy prices have the potential to add to inflation pressures," it said. Reacting to this rate increase, commercial banks set their lending rates at 7.50 percent, the highest in nearly five years.