Washington, DC, November 2, 2005--The Federal Reserve raised interest rates again Tuesday and signaled more to come.
The Federal Open Market Committee voted unanimously to raise the benchmark Federal funds target rate by a quarter percentage point to 4.0%, leaving rates at the highest level since June 2001.
There were only minor changes to the FOMC's statement from the September meeting.
The FOMC said the Gulf Coast hurricanes higher energy prices have the potential to increase inflation pressures and have temporarily depressed growth and hiring.
However, the committee said growth should be helped by rebuilding in the Gulf Coast.
"The cumulative rise in energy and other costs have the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remained contained," the committee said.
The committee's statement retained language stating that rates were still accommodative and that "accommodation can be removed at a pace that likely to be measured."
Economists expect the Federal Open Market Committee to continue hiking rates by a quarter percentage point at the two meetings left before Fed chief Alan Greenspan retires on January 31.
Some analysts said the Fed would be reluctant to make any major changes to the statement during the transition from Greenspan to Ben Bernanke.
The next FOMC meeting will be held Dec. 13.
The FOMC has raised rates 12 times since June 2004 in an effort to bring the fed funds rate to a more neutral level, that is, a level where rates are not triggering inflation or slowing growth.
