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Last Updated: Wednesday, 19 April 2006, 06:39 GMT 07:39 UK
Fed hints at end to US rate rises
Ben Bernanke
Inflation remains a key issue for Fed Reserve boss Ben Bernanke
The US Federal Reserve has hinted that its policy of raising interest rates could be approaching an end.

Minutes from the Federal Open Market Committee (FOMC) revealed that most members believed "the end of the tightening process" was near.

The Fed Reserve raised rates in March for the 15th time in a row to 4.75%, the highest level since April 2001.

The eagerly awaited FOMC minutes were the first covering a meeting held by new Fed Reserve chairman Ben Bernanke.

The prospect of an end to interest rate rises helped push the Dow Jones index up 194.99 points to close at 11,268.77.

Inflation risks

I think it's important to recognize that inflation is where the Fed wants to be - they don't want to overshoot, I think they will pause real soon
Dana Johnson
Chief economist, Comerica

Mr Bernanke took over from his veteran predecessor Alan Greenspan in January, and analysts have been keen to see in which direction he plans to take the Fed Reserve.

Under Mr Greenspan, the Fed Reserve pursued a policy of gradual interest increases with the aim of cooling inflationary pressures.

But according to minutes from the March's FOMC meeting "most members thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy".

However, members "also recognised that in current circumstances, checking upside risks to inflation was important to sustaining good economic performance".

Analysts still expect the Fed Reserve to increase the cost of borrowing by a further quarter percentage point in the near future.

But many believe any rise to 5% would mark - at least for the time being - an end to the current policy.

"I think it's important to recognise that inflation is where the Fed wants to be," said Dana Johnson, chief economist at US financial services company Comerica.

"They don't want to overshoot. I think they will pause real soon."


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