Fed Raises U.S. Rates, Measured Hikes to Continue

By Glenn Somerville, Reuters

The Federal Reserve raised U.S. interest rates Tuesday for the 12th straight time, taking them to the highest level in more than four years and indicating more hikes will be needed to keep inflation at bay.

The central bank’s policy-setting Federal Open Market Committee, expressing concern over potential inflation pressures, voted unanimously to raise the benchmark federal funds rate charged on overnight loans between banks a quarter percentage point to 4 percent.

The move extended a campaign of rate rises the Fed initiated in mid-2004 and took overnight borrowing costs to a level last seen in June 2001.

In a statement outlining its widely expected decision, the Fed described monetary policy as accommodative — its way of saying more hikes are needed — and said hurricanes that struck earlier this year were unlikely to derail economic expansion.

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