Tuesday, August 09, 2005

10th Time: Fed Raises Target Rate

Greenspan does as expected. This from Reuters
The Federal Reserve raised a key U.S. interest rate a quarter-percentage point on Tuesday, offering no sign after a 10th straight rise that it was ready to end its campaign of modest increases to curb inflation.

The U.S. central bank's policy-setting Federal Open Market Committee unanimously voted to lift the benchmark federal funds rate, which can sway borrowing costs throughout the economy, to a four-year high of 3.5 percent.

The panel said rates are still low enough to lend support to the economy and repeated that it expected to continue to remove monetary stimulus at a "measured" pace, suggesting further quarter-point moves ahead.

In an effort to head off inflation risks in a growing economy, the Fed began in June 2004 to push up the federal funds rate that banks charge each other for overnight loans from a 1958 low of 1 percent.