Tue Dec 13 21:02:57 2005 - Greenback Sold as Fed Raises Rate

On Wednesday the Federal Open Market Committee increased the federal funds rate by 25 basis points to 4.25 percent; the greatest level since April 2001. Nevertheless, the FOMC suggested that it may be nearing the end of its continued rate increases. To keep inflation under control, the Federal Reserve may raise the rate by one more quarter-point in the near future.

The greenback was sold extensively as traders assumed that fed funds rate hikes may come to an end while US stocks and bonds took a rise. Foreign Market Watch assumes a 63% chance for a quarter-point rate hike on January 31st, 2006.