(November 16 – 14:45 ET) –
“The Federal Reserve raised
short-term interest rates Tuesday,
choosing to take yet another
pre-emptive strike against
inflation,” The Interactive Wall
Street Journal is reporting.
“But central bankers changed
their policy directive to a neutral
one, meaning they expect to hold
rates steady for a while.
“The Fed rose the target for the
federal-funds rate — which banks
charge each other for overnight
loans — to 5.5% from 5.25%. In
mid-October, the Fed left the
fed-funds rate unchanged, but
changed its policy directive to
reflect it is leaning toward
raising rates in the near future.
“Fed policy makers said that
while there has been some slowing
of economic activity, they were
worried that the pace of growth
‘continues in excess of the
economy’s growth potential.'”
“Tuesday’s decision moved the
fed-funds rate back to where it
was before the central bank cut
rates in three, quarter-point
increments last year to keep
financial turmoil in Asia and
Russia from derailing the U.S.
economy. The Fed raised rates for
the first time in more than two
years on June 30 and again on Aug.
24.
“The three moves, the Fed said
Tuesday “should markedly diminish
the risk of inflation going
forward.”
“The central bank’s policy-
making panel, known as the Federal
Open Market Committee, also raised
its mostly symbolic discount rate
— which the Fed charges on direct
loans to banks — to 5.0% from
4.75%.
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