FED CONTINUES ITS AGGRESSIVE STANCE ON RATES

The Federal Reserve has struck again. For the sixth time since last June, Fed chairman Alan Greenspan has raised the federal funds rate, which is the interest that banks charge each other. All the previous hikes these last eleven months were by a quarter-point; this time, it was a bolder half-point. After this aggressive action, the bellwether rate stands at 6.5 percent.

Commercial banks followed suit by immediately raising their prime lending rate -- the benchmark for millions of consumer and business loans to their most credit-worthy borrowers -- by the same half-point. These increases leave the prime rate at 9.5 percent, its highest level since January 1991, when the country was last in a brief recession.

The latest Fed action says clearly that Greenspan and his colleagues are concerned that continued brisk demand generated by the booming economy would outstrip the country's available supply of goods and workers. Analysts across the spectrum are warning that even the most recent aggressive action may not be the last. "We got some fairly hawkish wording in the statement," said David Jones, chief economist at Aubrey G. Lanston & Co. in New York. "The Fed is clearly paving the way for additional hikes."

Alan Greenspan, who has served five presidents over the last 30 years and is now in his fourth term as Fed chief after being appointed to his current post by three of them, is a legendary figure in American high finance. We watch his pronouncements and actions with a mix of wonder, bewilderment and awe. And as we do, we hope this time he's right in taking this aggressive action so consistently over the last year.