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Fed Raises Rates a Quarter Point

November 16, 1999

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.″

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