As expected, the Federal Open Market Committee increased the federal funds rate to 4 1/2 percent today. The Fed correctly pointed out that the economic expansion remains on a sold footing, but cautioned that volatile energy prices remain a concern on the inflation front.
Today marks the last day of Alan Greenspan’s term as Chairman of the Federal Reserve. While at the helm of the Fed for more than 18 years, Chairman Greenspan successfully navigated our economy through some dangerous waters.
While his accomplishments are many, I think his most important act as Chairman was his recognition in the mid-1990s that changes in technology were enhancing underlying productivity growth and that the economy could grow faster than previously thought without igniting runaway inflation which the Fed worked so hard under Chairman Volcker to extinguish in the early 1980s.
By persuading other members of the FOMC to keep interest rates low, Chairman Greenspan enabled the economy to grow at a robust 4-percent pace for four consecutive years (1996-1999) – a first in over three decades. As a result, the economy created 12.4 million jobs – the largest 4-year surge in 20 years.
Chairman Greenspan deserves a sincere “thank you” for his dedication to public service from a grateful nation.
Thank you, Chairman Greenspan
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