Fed Poised to Raise Interest Rates Tuesday
he Federal Reserve is expected to raise interest rates again Tuesday by a quarter-point to 3%, news services reported.
If enacted the raise would be the eighth such increase since June 2004, when the U.S. central bank began tightening credit as a means to rein in inflation, the Associated Press reported.
The Fed last raised the benchmark U.S. interest rate a quarter-point to 2.75% on March 22, the highest level since October 2001, saying it would carry out any additional increases at a "measured" pace. (Click here for previous coverage.)
Higher rates are seen a defense against an outbreak of inflation. But when it is more expensive to borrow money, some consumers and businesses are less inclined to spend and invest.
Over the first three months of the year, the economy grew at a 3.1% annual rate, the slowest in two years, AP said. Analysts cited soaring energy prices, led by crude oil, which slowed spending by companies.
Some economists believe second-quarter economic growth could be even slower, AP reported.
Inflation is rising, with consumer prices jumping by 0.6% in March, the biggest increase since October, AP said. The 0.4% gain in the so-called “core inflation” rate — which excludes energy and food — was the largest rise since late 2002.