Interest rates raised by US Fed

THE Federal Reserve raised benchmark US interest rates for the 17th time in succession on Thursday, and said inflation risks remain even though slowing economic growth should help ease price pressures.

As was widely expected, the central bank’s policy-setting Federal Open Market Committee (FOMC) voted unanimously to lift the benchmark federal funds rate target a quarter-percentage point to 5.25%, its highest level since March 2001.

In a statement announcing its action, the FOMC — meeting for just the third time under new Fed chairman Ben Bernanke — held open the possibility of further rate rises in its two-year credit-tightening campaign.

Still, the Fed said, there were some recent signs that economic growth was moderating, partly because of the gradual cooling of housing markets and higher interest rates.

“Although the moderation in the growth of aggregate demand should help to limit inflation pressures over time, the committee judges that some inflation risks remain,” it said.

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