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Fed. Reserve Raises Interest Rates

June 30, 1999

WASHINGTON (AP) _ The Federal Reserve raised interest rates today for the first time in two years, hoping to slow the red-hot U.S. economy by making it more expensive for American consumers and businesses to borrow.

The Fed announced it was increasing its target for the federal funds rate, the interest that banks charge each other on overnight loans, by a quarter-point to 5 percent.

The action, which had been widely expected, was announced at the end of the second day of deliberations by the Federal Open Market Committee, the group of Fed policy-makers who set interest rate policies.

The Fed said given current tight labor market conditions, it ``must be especially alert to the emergence, or potential emergence, of inflationary forces that could undermine economic growth.″

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