ICS Magazine

Fed Raises Interest Rate to 2.25 Percent

December 14, 2004
WASHINGTON (Reuters) - The Federal Reserve raised U.S. interest rates on Tuesday by a quarter-percentage point for the fifth time this year and said it will keep gradually lifting them from rock-bottom levels to forestall inflation.

The unanimous and widely expected decision by the central bank's policy-setting Federal Open Market Committee moves the benchmark federal funds rate -- which affects credit costs throughout the economy -- to 2.25 percent from 2 percent.

The Fed began to lift rates in June from a 1958 low of 1 percent and is poised to move them higher still as long as the economy continues its steady march forward.

A few analysts had wondered whether the Fed would warn about a heightened risk of upward price pressures, but the central bank said risks to the economy remained balanced between inflation and renewed weakness.