Fed raises rates again

Central bank boosts key short-term rate another quarter point despite expected impact of Katrina.

September 20, 2005: 2:18 PM EDT

NEW YORK (CNN/Money) - The Federal Reserve raised a key short-term interest rate Tuesday, dashing the hopes of some who had hoped the Fed would pause to assess the impact of Hurricane Katrina on the economy.

The central bank's policy-makers boosted their target for the federal funds rate a quarter-percentage point to 3.75 percent, the highest level in more than four years. The fed funds rate, an overnight bank lending rate, affects the rates for credit cards, car loans and adjustable-rate mortgages.

This marks the 11th consecutive time that the Fed has raised rates since June 2004 as Alan Greenspan and other central bankers seek to keep inflation under control. In its heavily scrutinized statement, the Fed said that more "measured" rate increases were likely in the coming months. The Fed meets again on November 1.