Fed boosts rates another quarter

Greenspan & Co. hint at more "measured" increases. But with rates at 3.25%, is the Fed almost done?

June 30, 2005: 2:17 PM EDT

NEW YORK (CNN/Money) - The Federal Reserve raised the target for a key short-term interest rate by a quarter of a percentage point at the conclusion of its two-day meeting Thursday.

The move, widely expected by Wall Street, marked the ninth consecutive time the nation's central bank has boosted rates in the past year as it continues to fight inflation.

In its closely watched statement, the Fed said it would probably keep increasing rates at a "measured" pace. This phrase, which has been used in every Fed statement since May 2004, is an indication that another quarter-point hike is likely when Fed chair Alan Greenspan and other Fed policy makers meet again on August 9.

Following Thursday's increase, the federal funds rate, which banks use to determine their overnight lending rates, now stands at 3.25 percent, its highest level since shortly before the September 2001 terrorist attacks. Although this is still low by historical standards, there is a growing sense among many economists and investors that the Fed may stop raising rates after August's meeting.