US raises rate and warns of more hikes

US Federal Reserve policy makers raised the benchmark interest rate for the 11th straight time yesterday and signalled they may do so again, saying the economy faces only a “near-term” setback after Hurricane Katrina.

The Fed raised the overnight bank lending rate a quarter point to 3.75% after meeting in Washington.

Fed Governor Mark Olson voted against his nine colleagues to argue the rate should be held steady, marking the first dissent in a decision since June, 2003.