Fed Raises Rates a Quarter Point
WASHINGTON (AP) _ The Federal Reserve raised interest rates by a quarter point today, boosting a key rate for the third time this year in an effort to slow the sizzling U.S. economy and keep inflation from becoming a problem.
The announcement came after a closed-door meeting of the Federal Reserve Open Market Committee, the policy-makers who set interest rate policies.
The Fed said it was increasing its target for the federal funds rate _ the interest banks charge each other on overnight loans _ to 5.50 percent from 5.25 percent.
It also raised its mostly symbolic discount rate, the interest that the Fed charges to make direct loans to banks, by a quarter point to 5 percent.
In a statement explaining its decision, the Fed said, ``Although cost pressures appear generally contained, risks to sustainable growth persist.″
Fed policy-makers said that while there had been some slowing of economic activity, they were worried that the pace of growth ``continues in excess of the economy’s growth potential.″