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Essay / Research Paper Abstract
This 2 page paper argues that the Federal Reserve will raise rates in December of 2005 and explains why. Greenspan's retirement is discussed. Bibliography lists 1 source.
Page Count:
2 pages (~225 words per page)
File: RT13_SA545Yes.rtf
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Unformatted sample text from the term paper:
that they might, is ludicrous. One important factor that almost guarantees a rate hike next month is that Alan Greenspan will be replaced beginning with the February 2006 meeting (Kirchhoff,
2005). Many analysts predict that Greenspan will do "heavy lifting on rates" before he leaves (Kirchhoff, 2005). There are essentially two reasons why the fed will raise rates in December.
They have developed a pattern of tweaking the rate a bit each month. Each month there is speculation, but it came as no surprise in November of 2005 for example
when the rate was increased. Further, this "will they or wont they" game has been going on since the middle of 2004. The investors have their answer: yes. In past
months, there have been a few surprises, but people should be used to it now. However, the other reason why the increase is very likely is because this is Alan
Greenspans last chance to raise the rate to a particular desirable level. The thinking is that perhaps it is not high enough, despite the fact that the economy has been
rebounding nicely. Because Greenspan will still be in his role in January, he will have the opportunity to take it down a notch if he likes. He wont, but the
idea that he would skip December for no reason at all is wishful thinking. If anything, he could leave it alone in January and raise it even more than a
quarter point in December so that he leaves after all the work is done. Doing nothing in December, given recent history, is inconsistent with Greenspans overall plan. In some
way, whether or not rates are raised or lowered in December is important. There is no telling what the new guy will do. Greenspan has been in the position for
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