Federal Reserve Raises Key Interest Rate

The U.S. Federal Reserve raised its key interest rate Tuesday a quarter of a point to 3.5 percent in a widely anticipated move.

The hike in the rate commercial banks charge each other for overnight loans was the 10th in 14 months by the bank’s Federal Open Market Committee.

The committee added language to its announced rate hike indicating that more such rate hikes were likely.

The committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity, it said in a statement.

Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually. Core inflation has been relatively low in recent months and longer-term inflation expectations remain well contained, but pressures on inflation have stayed elevated.