Federal Reserve Raises Interest Rate Quarter Point
After deliberation, and weighing of various options over concern of inflation, the Federal Reserve decided at their May 10th closed-door meeting to raise the federal funds rate to 5%, which is the highest it’s been in 5 years.
The Federal Reserve started the campaign to raise the rates after concerns of inflation, to tighten credit in June of 2004.
Newbie Fed chairman Ben Bernanke decided to stay open to the possibility of additional rate hikes “in view of the risk that the outlook for inflation could worsen,” according to public meeting minutes.
The decision to ultimately boost the rate by one quarter point was unanimous, and won out over not raising the rate at all, or raising it a half point, so it’s what you might call a “compromise”.
The reasons cited were primarily to keep inflation in check as well as help economnic growth and expansion in the financial service sector.
