Yesterday there was the last FRS meeting under the direction Allan Greenspan.  So Allan Greenspan’s epoch in the American economy comes to an end, one of the most influential financial officials not only in the USA, but also in the world.

At the end of the meeting 79 year old FRS Head said goodbye to Committee members, and at the same time the US Senate confirmed Ben S. Bernanke’s appointment as his successor.

Today there will be his adjuration ceremony in the Senate.

The majority of the Committee voted for increase of the federal funds rate on 25 basic points up to 4,5 % per annum. The market, as it was said before, was ready for this decision and "won back" this news in advance. Being based on the comments, followed the decision, the market could not consent.

The communique text: “Today the Federal Open Market Committee has decided to raise the target level under the federal funds rate on 25 basic points up to 4.5 %.

In spite of the fact that the last economic data were mixed, economic activity development seems to be confident. Net inflation remained low the last months, long-term expectations on inflation are still constrained. Nevertheless, possible acceleration of growth of raw material use and the high prices for energy carriers have potential to strengthen inflationary pressure.

The Committee believes that some further toughening of monetary policy can be needed for achievement of approximate balance between steady economic growth and price stability. If necessary the Committee reacts to changes of economic prospects to provide achievement of this purpose.

In voting for FOMC monetary policy took part: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Jack Guynn; Donald L. Kohn; Jeffrey M. Lacker; Mark W. Olson; Sandra Pianalto; and Janet L. Yellen.

Besides FOMC Board took a decision on increase of the discount rate on 25 basic points up to 5,5 %. By this decision the Board complied with the request of Boards of Federal reserve banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Saint Louis, Kansas City, Dallas and San Francisco".

The formulation "measured pace" of rates increase is excluded from official statement of the US FRS. At the same time, the text of the statement does not exclude an opportunity of rates increase in case of inflationary pressure rise.

In comparison with December, Committee members have softened the key formulations of the official statement. It is caused by slowdown of economic growth, cooling of the housing market in the USA and the end of Allan Greenspan’s epoch.

Present campaign on toughening of a monetary policy began in the middle of 2004. Then the interest rate was up to 1 % - the lowest for 50 years. From the beginning of toughening of policy FRS heads emphasized that the rate would be raised at "measured" pace. It became a synonym of the rate increase on 25 basic points each time.

Nevertheless, the formulation "measured rate increase" is excluded from FRS statement. Instead of it the statement says, "Probably some further toughening of a monetary policy will be required to neutralize risks for economic growth and price stability. As a whole the market’s reaction to FRS decision can be regarded as neutral.

This week the market expects key news on manufacture and employment, which in many respects will affect the market’s mood in the near future. Speed-up of economic growth can mean that FRS will raise rates some times after 14-th increase in a row, made yesterday.

Today the will be the ISM index publication.

The Institute for Supply Management index likely grew 55.8 in January against 55.6 in December, according to poll of 67 economists, led by Bloomberg agency. Values of the index above 50 mean growth. A level, expected in January, is above the average value of the index 55.5 a year ago.

At the end of a week the core employment index - The Employment Report of the Bureau of Labor Statistics, U.S. Department of Labor will be published.

The report includes 4 indicators:

Average Workweek

Hourly Earnings

Nonfarm Payrolls - employment level - number of workplaces, except for agriculture.

Unemployment Rate - the percentage rate of unemployment.

Technically the market’s picture has not changed, the quotations were into a narrow range of the prices - 1,2065 - 1,2180. While we remain outside of the market.