In his last meeting, retiring chairman Alan Greenspan and the Federal Reserve pushed borrowing cost to the highest point in nearly five years, the Express reported.
In Tuesday’s meeting, according to The Associated Press, the federal funds rate rose by one-quarter percentage point to 4.50 percent.
Even though a hike in the federal fund rate may influence a host of interest rates, student loan rates are not one of them.
That is because those rates are not directly connected with the Fed fund rate, CNN Money reported during the 2004 rate hike, when a drop in student loan rate was predicted.
"As a result, interest rates for federally guaranteed, variable-rate student loans issued after July 1, 1998," CNN.com stated in 2004, "will drop 0.05 percent."
Four years since then, the Senate approved Ben Bernanke’s nomination as the 14th chairman of the central reserve bank" after the announcement of the rate hike.
Greenspan, 79, ended his 18-and-1/2-year run as chairman of the Fed, making him "the longest-serving Fed chairman in history," Taipeitimes.com reported.
Greenspan was nominated by the late former president Ronald Reagan in 1987, when the Fed fund rate was 7 percent.
"He is well-respected," Chief Economist Chris Low, of FTN Financial based in New York, told
Taipeitimes.com. "The market wanted him–he was somewhat anticipated."
Bernanke, 52, was sworn in Wednesday morning at the Fed headquarters.
"[He] carries a lot of credibility in the marketplace," Chief Economist Robert MacIntonsh of Eaton Vance Management told Taipeitimes.com about Bernanke. "He is seen as a…credible candidate that would prove reassuring in the near term."