But Fed chairman Alan Greenspan warns that officials can't foresee the future and prevent all bad things from happening

Modern Machine Shop, Sept, 2005

But Fed chairman Alan Greenspan warns that officials can't foresee the future and prevent all bad things from happening. Policymakers cannot be counted on to anticipate potentially adverse developments in advance to effectively address them. Central bankers are trained to focus on what could go wrong, avoiding bad outcomes. A dose of central-banker risk assessment may also be good advice for participants in the markets.

The key question is: will be Fed's policy become more aggressive to alter the perception that its policy is too stimulative? The continuation of stimulative financial conditions was an important factor in the robust economy during the past year. Short-term interest rates have risen in line with the increases in the key federal funds rate that the Fed controls, but long-term rates, which have a large effect on the spending of businesses and individuals, have declined.