Analyzing the Fed's Rate Hike: Words Speak Volumes

By now, it's old hat that Alan Greenspan of the Federal Reserve will recommend a half-point hike in the interest rate, but how he conveys the news is more likely to be news than the interest rate hike itself.

For example, if the Fed were to communicate that this hike is the last one in the current monetary cycle, that would be a signal to Wall Street that there may be a rally.

Instead, the Fed will be more cautious and not reveal any information as to what it may do in the future - and that they are not through with raising rates.

At the same time, if the Fed says the rate hike is to head off another round of inflation, then that might force them into yet another hike during the late-June meeting.

In short, Greenspan will monitor what he says very carefully to head off any speculation that may send the incorrect message.


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