Fed Boosts Short-Term Rates,Again

WASHINGTON - (11/02/05) -- The Federal Reserve proceededTuesday with its bid to tamp down inflation and raised short-terminterest rates for the 12th time in a row, by 25 basis points, to4%. The Central Bank also indicated it will continue itsinflation-busting bid and raise rates by another 25 bps at its nexttwo meetings by year-end. "Their signaling that the economy is indecent shape but they're still worried about inflation," said JeffTaylor, senior economist at NAFCU. But Taylor suggested the Fed'sactions have had little tangible affect so far, as housingcontinues to boom, fueling overall economic activity. Credit unionshave reacted to the Fed's rate-rising by boosting CD rates butholding down rates on core share and share draft accounts nearrecord lows, Taylor told The Credit Union Journal. The effect hasbeen low share growth, which he predicted will continue for therest of the year.