The Fed has grown all too predictable with its rate hikes as the US monetary policy makers have raised rates six consecutive times since last summer, and every time the rate was increased a quarter-point. Some were expecting the Fed to tighten its grip at last week’s meeting opting for a half-point rise based on the more hawkish tone of the previous meeting’s minutes. But the Fed did not deviate from its announced policy of measured increases.

Economists expect the Fed to continue with the rate hikes in 2005 as well until the rate reaches the so-called “neutral” level where it will neither stimulate nor hamper the economic development. The target envisaged by the Fed is a mystery to everybody, but the survey conducted by The Wall Street Journal Online has zeroes in on 3.75% as an average forecast.

Rates that were standing the Fed to the extremely low levels of 1% in June 2004 to boost economic growth in the wake of September 11 attacks and recession of 2001.

Diane Swonk, chief economist at Mesirow Financial in Chicago, believes that the Fed will pause its regular increases if the funds rate gets to 3%. She thinks that the Fed policy makers "don’t want to hit on the brake. They want to hedge against tightening too far."

Jack Guynn, president of the Atlanta Fed that is at the moment on the Fed’s policy-setting panel said that the rate is yet too low for the Fed to abandon its accommodative pace. So far guessing has been easy, but if the economic recovery is pushing forward at full throttle, and the slowdown in productivity triggers a rise in inflation, the next policymakers’ move is uncertain.

What is meant by higher inflation is also a subject for discussion. Economists are debating whether the US economic policy-making institution should choose a definite measure that will help it assess the inflation. Most favor the Commerce Department’s personal-consumption expenditures price index that excludes food and energy prices, believed to be Mr. Greenspan’s personal favorite. Another possible option is the Labor Department’s consumer-price index or its "core" index.

While analysts have been struggling to decipher what lies ahead for short-term interest rates, the hikes have yet trickled into long-term rates that reflect broader conditions in the market. Mortgage rates are in fact even lower than last spring, although they are expected to rise over 2005. High yields on bonds have puzzled analysts that explain the phenomenon by the vast amount of money in the financial market chasing too few goods.