Fed ups rates again

The Federal Reserve on Wednesday raised its key short-term interest rate by a quarter-point for the sixth time since June and signaled that it remains on the steady credit-tightening course.

The Fed8217;s policymaking Open Market Committee said it voted to lift its benchmark short-term rate to 2.5 per cent from 2.25 per cent, putting the rate at its highest level since October 2001. The move, which had been considered a virtual certainty, will push up some consumer borrowing costs but also will mean more income for savers, already enjoying the highest yields in three years.

With little change in the economic backdrop since mid-Dec., many analysts said it made no sense for the Fed to do anything but affirm what the world already knows: that Chairman Alan Greenspan and his peers believe they can continue to gradually lift rates to normal levels as the economy expands. 8212;LAT-WP