Subscribe to free Email Newsletter  
 
 
   

WORLD / America

US interest rates hit 5-year high
(AP)
Updated: 2006-05-11 09:56

Federal Reserve boosted Americans' borrowing costs for the 16th time in a row on Wednesday, the highest level in five years but suggested what happens next will be much less predictable.


The Federal Reserve lifted U.S. interest rates for a 16th straight time on Wednesday, and said it may need to raise rates more to keep inflation risks down in its nearly two-year-old credit-tightening campaign. [Reuters]

Chairman Ben Bernanke and his Fed colleagues left their options wide open to order yet another increase or to take a break in their two-year rate-raising campaign.

Decisions on interest rates will hinge more heavily on what upcoming barometers say about economic activity and inflation, the Fed policymakers indicated.

If surging energy prices should spark broader inflation, the Fed could opt to bump up rates again. If the economy should show signs of slowing more than anticipated, a pause in rate raising could be in store.

To keep the economy and inflation on an even keel, the Fed unanimously decided on Wednesday to increase its federal funds rate by one-quarter percentage point to 5 percent. It marked the 16th increase of that size since the Fed began to tighten credit in June 2004.

The funds rate, the interest that banks charge each other on overnight loans, affects a variety of other interest rates charged to consumers and businesses and thus is the Fed's primary tool for influencing economic activity.

In response, commercial banks raised their prime lending rate for certain credit cards, home equity lines of credit and other loans by a corresponding amount, to 8 percent.

The actions lifted both the funds rate and the prime rate to their highest points in just over five years.
Page: 12

 
Comments (total )   Print This Article    E-mail  
 

   
Copyright 1995-2007. All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form.
Note: Browsers with 1024*768 or higher resolution are suggested for this site.
Registration Number: 20100000002731