The Federal Open Market Committee decided today to raise its target for the U.S. federal funds rate by 25 basis points to 3.75%. The Fed continued on its path of monetary tightening despite concern about the economic impact of hurricane Katrina.

Today’s increase is the 11th since mid-2004, and was widely anticipated by market watchers.

In its statement. the Fed drew attention to higher energy prices.

“The widespread devastation in the Gulf Region, the associated dislocation of economic activity, and the boost in energy prices imply that spending, production and employment will be set back in the near term,” the FOMC said in a statement.

The hurricane’s damage may add to energy price volatility as well as raising premiums for some energy products, it said.

Despite the near-term uncertainty raised by Katrina, the Fed said the devastation doesn’t “pose a more persistent threat.”

Monetary policy and robust productvity growth continue to support the economy, even as higher energy and other costs have added inflationary pressures, it said.

As it has after each of the past 11 meetings, the FOMC said it can likely raise rates at a “measured” pace. So far this has preceded quarter-percentage point hikes at the next meeting.