The new Fed chairman Ben Bernanke is living up to his promise to carry through on his predecessor’s policies, reports the Washington Post. At its latest meeting the Fed boosted the prime rate to 4.75 percent, the 15th such hike in the last 21 months.

The rationale was apparently that the economy is going strong and so the focus is again on containing inflation by tapping the brakes. And it could be even more of the same with energy prices rising and unemployment at near historic lows.

The market took the news badly yesterday because it hopes that every meeting will bring an end to the ratcheting up on rates. It’s another case of buy on the rumor (this time, that the rate increases were ending) and sell on the news (that they weren’t ending).

But we should remember that these rates are pretty low by historic standards and 12 months ago people were wondering if Greenspan had been too expansive with oh so low interest rates. The virtue of the tweaking rates every two or three months is that it is gradual and it makes clear that the Fed is taking a longer term view and not reacting wildly to the latest monthly figures from the Commerce Department.