Industry News

Fed raises interest rates

Signals that increases may be tapering off
Published on Dec 13, 2005

The Federal Open Market Committee, headed by Federal Reserve Chair Alan Greenspan, today raised its target for the federal funds rate by 25 basis points to 4.25 percent. The widely expected move is the 13th time in a row the Federal Reserve has raised interest rates. The bank rate now at its highest level in four and a half years. "Despite elevated energy prices and hurricane-related disruptions, the expansion in economic activity appears solid," the Fed said in a statement. "Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained." Framed in the always-cautious language of the Fed, the comments appear to suggest that the institution may be satisfied that its chief concern, containing inflation, is under control. This in turn suggests that the series of rate hikes might be coming to an end, a theory held by many industry observers. The statement also seemed to be hinting that a few more rate increases were still in the works:...

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