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February 27, 2006

The Bernanke Era

With Ben Bernanke having taken over as chairman of the Federal Reserve from the retiring Alan Greenspan, who headed the Fed for 18 years, economist Mike Walden says we can expect an interest rate hike in the short-run and more openness and clearer speech overall.

"I think, first of all, we should expect probably at least one more hike in interest rates," says Dr. Walden, a specialist with the North Carolina Cooperative Extension Service.

"Some economists think that will be needed for the economy; others think it will be needed to show the world that Bernanke is an anti-inflationary chairman of the Fed, and the way the Fed demonstrates that is to raise interest rates," he explains. "But most economists think we are not going to have an entire year of rate hikes -- but maybe one or two more.

"We might also look for more openness on the part of the Fed," Walden adds. "Bernanke has said he wants the Fed to communicate more to the world, to the country, about where the Fed wants to take the economy.

"And then perhaps we will see clearer speech. Greenspan was, of course, known for talking but not really saying anything. He spoke in code. I think we might expect clearer speech from Bernanke."

Posted by deeshore at February 27, 2006 08:00 AM