Alan Greenspan believes America won’t suffer deeply from Hurricane Katrina’s destruction and can handle yesterday’s hike in interest rates to their highest level in four years.
The Federal Reserve chairman and nine policy makers, with the exception of a single commissioner, voted to boost a benchmark interest rate by a quarter-point to 3.75 percent, leaving open the possibility of two more similar hikes before year’s end.
That could push the benchmark federal funds rate above 4 percent by December, which could trigger rate hikes for credit cards, mortgages and business loans. In turn, the tighter credit and money supply would squeeze many businesses.
The markets didn’t like the move much, as the Dow Jones industrial average fell 76.11 to 10,481.52, while the Standard & Poor’s 500 lost 9.68 to 1,221.34. The tech-heavy Nasdaq dropped 13.93 to 2,131.33.