WASHINGTON -- Federal Reserve policy makers differed last month on how much higher interest rates would need to rise to keep the economy and inflation on an even keel, but most believed the nearly two-year rate-hike campaign's end probably wasn't far off.
Minutes of the Fed's closed-door meeting on Dec. 13, released yesterday, provided insight into the most extensive changes to date in the wording of the central bank's policy statement, which economists parse for clues about the possible course of future rate moves.
''Views differed on how much further tightening might be required," the minutes said, explaining why changes were made to the Fed's policy statement released after the December meeting.
One of the most important changes was that the Fed dropped language -- contained in previous statements -- that described interest rates as being too low, or accommodative. Economists viewed that as a sign that the Fed was winding down its rate increases.
Fed chairman Alan Greenspan and his colleagues decided at the December meeting to boost rates for the 13th time since June 2004 to prevent inflation from flaring up. They noted that the economy was growing and the labor market had gotten stronger, forces that could lead to a pickup in inflation.
''Although future action would depend on the incoming data, this characterization of the outlook for policy was seen by most members as indicating that, given the information now in hand, the number of additional firming steps required probably would not be large," the minutes stated.
On Wall Street, stocks were buoyed by the Fed's assessment. The Dow Jones industrials surged 129.91 points to close at 10,847.41. The Standard & Poor's 500 index and the Nasdaq composite index also finished higher. The Fed's action in December left its key short-term rate, the federal funds rate, at 4.25 percent, the highest in 4 1/2 years. That rate, the Fed's main tool to influence the economy, is the interest banks charge each other on overnight loans.
Before the Fed embarked on its rate-raising campaign in June 2004, the funds rate had been sliced to 1 percent, a 46-year low, in an effort to help the economy get back on its feet after the 2001 recession, terror attacks, and a wave of accounting scandals.