WASHINGTON, Nov. 1, 2005
Fed Hikes Interest Rate
Quarter-Point Increase; 4 Percent Is Highest Level In Over Four Years
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(AP)
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President Bush leans over to shake hands with Federal Reserve Board Chairman Alan Greenspan after naming Ben Bernanke his successor Oct. 24, 2005. (AP)
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Interactive Inside The Fed A history of the Federal Reserve, glossary of terms and a look at changing interest rates.
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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
"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 remain contained," the Fed said in its statement.
The increase pushed the funds rate to its highest level since it was at 4 percent in the summer of 2001, a time when the central bank was cutting interest rates to revive the economy.
The government reported last Friday that the overall economy grew at a solid annual rate of 3.8 percent in the July-September quarter. Private analysts said growth would have been well above 4 percent without the impact of the hurricanes.
People who know both Greenspan and Bernanke said Bernanke's pledge to follow Greenspan's policies is very credible when considering the close working relationship the two enjoyed when Bernanke served from 2002 to June of this year as a Fed board member.
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