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Will the Fed go too far?

The Federal Reserve should consider adopting the U.S. Postal Service's unofficial motto and tweaking it, just a bit.

"Neither snow nor rain nor heat nor gloom of night stays these governors from the swift completion of their appointed rounds of rate hikes."

When the Fed raised its target for a key short-term interest rate to 3.75 percent Tuesday, it proved that not even a hurricane would keep Alan Greenspan and fellow policy-makers from abandoning their plan of "measured" rate hikes for the foreseeable future. The rate hike demonstrated that the central bank is clearly more worried about inflation than any hit to growth.

According to fed funds future contracts listed on the Chicago Board of Trade, traders are now pricing in a quarter-point increase at the Fed's Nov. 1 meeting as well, when just a few weeks ago, many economists and investors were talking about a pause...

Anirvan Banerji, director of research with the Economic Cycle Research Institute in New York, also thinks that fears of a Fed-induced slowdown resulting from too many rate hikes are off the mark. He thinks a pause in the near future would be a mistake since the economy still appears to be strong.

"Right now the basic premise for some is that pre-Katrina data is irrelevant and post-Katrina data will be distorted so why not pause. But I think that's a cop out," Banerji said. "Even with oil prices near record high levels and interest rates rising, we haven't seen anything close to a recession. The economy is resilient."...