Central bank raises key overnight lending rate to 1.75 percent, their third hike of the year.
September 21, 2004: 2:31 PM EDT
NEW YORK (CNN/Money) - The Federal Reserve raised a key interest rate a quarter-percentage point Tuesday in an ongoing effort to raise lending rates from the lowest levels in more than 40 years.
The central bank's policy-makers unanimously agreed to raise their target for the fed funds rate, an overnight lending rate that influences rates throughout the economy, to 1.75 percent from 1.5 percent.
Though it was the third such hike this year, the fed funds rate is still at a level not seen consistently since 1962.
In the closely watched statement accompanying its release, the Fed repeated its view, first expressed on June 30, that it could probably keep raising rates at a "measured" pace.
"After moderating earlier this year partly in response to the substantial rise in energy prices, output growth appears to have regained some traction, and labor market conditions have improved modestly," the Fed wrote. "Despite the rise in energy prices, inflation and inflation expectations have eased in recent months."
On Wall Street, where the Fed's decision was widely expected, stock prices ticked higher after the announcement though they later returned to their pre-Fed levels.
Treasury bond prices edged higher. The Fed's next meeting is scheduled for Nov. 10.
One measure of the market's expectations for future rate hikes, the implied yield on the fed funds futures contract traded at the Chicago Board of Trade, priced in an 81 percent chance of another quarter-point rate hike in November.
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