The intrigue of this week was around one event the Federal Open Market Committee meeting.

It differed from the previous Committee meeting that it was the last FRS Board under Allan Greenspan.

Allan Greenspan is one of consecutive supporters of active monetary policy. Many analytical agencies assume that with Allan Greenspan’s retirement FRS policy in regulation of economy will be more weighed and a year and a half cycle of the directed increase of the rate can be stopped.

Before this event large market makers hurried up to close long positions against dollar before publication of FOMC decision on the rate have.

FOMC meeting on Wednesday marked the end of an epoch of Allan Greenspan in the American economy, 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 the Committee members, and at the same the Senate of the USA confirmed Ben S. Bernanke’s appointment as his successor.

Today the ceremony of his adjuration takes place in the Senate.

The majority of the Committee voted for increase of the federal funds rate by 25 basic points up to 4,5 % per annum. The market, as well as it was said earlier, was ready for this decision and "has won back" this news in advance. Being based on the comments after the decision on rates, 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 monetary policy firming can be necessary 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.

The second important event of this week became the Employment Report of the Bureau of Labor Statistics, U.S. Department of Labor.

The report was positive for the dollar in spite of the fact that employment data was below the predicted values.

The nonfarm payrolls in December were up 193 thousand in December, against the revised data on employment for the November, shown growth of 140 thousand, however analysts forecast growth up to 250 thousand.

However, the second significant component of this report - Unemployment Rate – showed the decrease of this indicator on 0,2 % from 4,9 % to 4,7 %.

After the release of the report the dollar became 1 % higher, or 100 points.

As a whole, the result of the last week was in favor of the dollar. Despite some volatility of a rate of eurodollar, from the end of the last Friday the dollar strengthened almost on 2 % or 200 points.

In sight dollar positions seems more preferable. Data on manufacture - ISM business index and Employment index were in favor of dollar this week, it is necessary to add the US federal funds rate increase up to 4,5 % per annum.

The dollar is under pressure of conditions of the market of energy carriers and a political factor - intense situation around the nuclear programs of Iran and threat of new acts of terrorism from Al - Kaida against the USA broadcast by Al-Jazeera telechannel.