Barring a catastrophe, Ben Bernanke, chairman of the Federal Reserve, and his colleagues will tomorrow announce the 16th consecutive 25 basis point increase in the federal funds rate target, bringing it to 5 per cent. The big question is: what will they do next?

Inflation is rising, the housingmarket is weakening and oil pricesare up 50 per cent in the past year. The response of policymakers to this challenge will almost surely be to pause as they wait for more information to clarify the very hazy economic picture.