Bernanke raises federal funds rate

The incoming Federal Reserve chairman, Ben Bernanke, raised the federal funds rate by 25 basis points to 4.75% at his first meeting in charge of the Federal Open Market Committee on March 28. The move was widely expected; however, the committee’s comments suggest a more hawkish note, observing that slowing GDP growth in the last quarter of 2005 reflected “temporary or special factors” and that growth has now rebounded. This points to further rate raises in future, perhaps above 5%.