Greenspan Fiddles With the Volume Control

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Alan Greenspan, party pooper, is back on the job. The morning after the Dow and NASDAQ each threw triple-digit shindigs over May’s sleeping-dog inflation number, the Fed chairman told Congress –- and, of course, the intently listening markets –- to keep the music down just a little bit. "When we can be preemptive, we should be, because modest preemptive actions can obviate the need of more drastic actions at a later date that could destabilize the economy," he told the Joint Economic Committee. Folks, that’s as clear as the man gets without actually saying it: The Fed will raise interest rates one quarter point at its meeting on June 29. Says TIME senior economics reporter Bernard Baumohl: "After two weeks of wondering, he just removed the uncertainty."

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So why were the markets –- led by NASDAQ, which as an index of debt-heavy tech start-ups is especially sensitive to interest rates –- on the uptick moments after that fateful "preempt" had passed Greenspan’s lips? Because he’s going to do it only once. "A quarter-point hike, which is really nominal, has already been factored in anyway," says Baumohl. "All this talk about preemption means there won’t be a series of hikes. Greenspan is still ahead of the curve." The idea of a preventative tweak –- and this chairman’s impeccable record says it’s worth a ton of cure –- had the inflation-fearing bond markets jumping for joy and yields dropping like a stone. Wall Street isn’t going to grouse about the host watering down the monetary punch just a little bit –- not if it means this nine-year Mardi Gras can go on indefinitely.