The Federal Reserve meeting starting at 9 a.m. EST today is almost certain to hike the key fed funds rate another quarter point to 2.25% to combat inflationary pressures amid positive signs of economic recovery. The decision is projected to be announced before 2:15 p.m.

The growth of 3.7% annual rate in the third quarter is solid, and the average job growth has been 178,000 in the past three months, enough to have effect on the 5.4% unemployment rate posted in November.
On the other hand, Labor Department statistics show that consumer prices have been rising at a 3.9% annual rate in 2004 in contrast to 2.2% at the same time last year.

This gives Fed a reason to continue with its accommodation’’ at a ``measured’’ pace professed by Alan Greenspan. ``Measured means one rate increase of 25 basis points at a time,’’ said Kevin Logan, senior market economist at Dresdner Kleinwort Wasserstein in New York.

“Measured’ is going to be with us throughout this whole cycle,’’ said David Resler, chief economist, Nomura Securities International Inc. in New York. That won’t change ``unless there’s a material reason to think they need to be un-measured, or that they need to stop,’’ he said.

The economy is not showing any miracles, butt the recovery is undoubted relieving Fed of the obligation to boost the economic development with the overnight interest rates that are at 40-year lows. "It’s not a robust expansion, but on the other hand it is an expansion and we are growing fast enough to see improvements in the job market," said David Berson, chief economist at mortgage finance giant Fannie Mae.