The federal funds rate, the rate that banks charge one another on overnight loans, was increased from 5.5% from 5.25%
The fed said in a statement that "although cost pressures appear generally contained, risks to sustainable growth persist," and that inflation pressure "continues in excess of the economy's growth potential."
One economic measure that could have triggered the rate rise is third-quarter gross domestic product, which increased from 1.9% to an annual rate of 4.8% this quarter.
Although productivity continues to look positive and wage rates are growing in moderation, the Fed said that: "the pool of available workers willing to take jobs has been drawn down further in recent months, a trend that must eventually be contained if inflationary imbalances are to remain in check and economic expansion continue." Unemployment rates were at the lowest rate in 30 years in October, at 4.1%.
HINGTON -- Short-term interest rates were raised yesterday by the Federal Reserve, which cited inflation worries. The Fed did, however, adopt a neutral policy, indicating that they would not be raising rates again soon.