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 WASHINGTON (AP) - Despite high energy prices, economic activity is still sturdy, Federal Reserve policymakers say, signaling they will keep boosting interest rates higher this year to keep inflation under control.
Chairman Alan Greenspan and his colleagues raised the federal funds rate by one-quarter percentage point to 3.25 percent on Thursday. The action represented the ninth increase of that size since the central bank began to tighten credit in June 2004.
In response, commercial banks began lifting their prime lending rates, which are used for many short-term consumer loans, by a corresponding amount to 6.25 percent. The increases left both the prime rate and the funds rate at the highest levels since August 2001.
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