Fed signals end to rate increases

Fed boss Alan Greenspan is bowing out after 18 years

The US Federal Reserve's long-running policy of rate increases could be nearing its end, minutes of the central bank's December meeting have shown.

Though more near-term rate rises may be needed to keep inflation in check, steps required would not be too drastic, the bank indicated.

Hopes for an end to the current cycle of rate rises came as figures showed a fresh slowdown in US factory growth.

More rises, economists have warned, could slow the economy even further.

"Given the information now in hand, the number of additional firming steps required probably would not be large," the Fed minutes said.

Measured pace

In December the Federal Reserve raised rates for the 13th time since June 2004 to prevent inflation from flaring up, leaving the nation's base rate at 4.25%, its highest for four-and-a-half years.

That increase was part of an 18-month process where the central bank focused on lifting rates from the exceptionally low level of 1% to more normal ones.

It has always pledged to boost rates at a "measured" pace to help cushion the impact of an economy trying to recovery from the 2001 recession, terror attacks and accounting scandals.

Many economists predict the Fed will up rates again at its next meeting on 31 January - the first meeting of 2006 and the last meeting for Alan Greenspan, who is set to retire that day after 18 years at the helm.

Another rate increase could come at the following meeting on 28 March, which will be the first one chaired by Mr Greenspan's successor, Ben Bernanke.