Alan Greenspan departs, with bulk of the job done

Jan 31 | Updated: Feb 1 2006, 05:30am hrs
Federal Reserve chairman Alan Greenspan completed 18 years at the Fed on Tuesday. He leaves a legacy of consistent economic growth and lower inflation. His final policy stamp at the Fed will be the interest-rate path he charts on his last day. From tomorrow, Bernankes Fed will decide whether more increases are needed to keep inflation in check.

Greenspan is leaving with a relatively clean slate, said Joshua Shapiro, chief US economist at MFR Inc in New York, who was named the most accurate forecaster in Bloomberg Markets magazines December issue. The bulk of the job has been done, and Bernanke will have the luxury to peruse the economic data and decide what the right course of action should be.

The Fed took rates off autopilot at its last meeting on December 13, altering its 18-month pledge to raise them at a measured pace. Instead, the Fed said only that some further measured policy firming is likely to be needed, a phrase that suggests the rate cycle may be nearing an end. The words Mr Greenspan chooses on Tuesday to describe the rate outlook will be the most closely watched in years.

The word measured could very readily disappear now, said Neal Soss, chief economist at Credit Suisse in New York.