Fed Pushes Short-Term RatesHigher

WASHINGTON - (06/30/06) – The Federal Reserve persistedThursday in its efforts to tamp inflation and economic growth bylifting short-term rates another 25 basis points–the 18thshort-term rate hike in two years. The Federal Open MarketCommittee continued to lift the benchmark overnight rate becauserising prices of energy and other commodities “have thepotential to sustain inflation prices,’ the FOMC said in astatement. The FOMC’s statement indicates the Fed believesthe economy is slowing to a more sustainable rate and that coreinflation remains under control, but is leaving the window open formore rate increase later this year, according to Jeffry Taylor,senior economist for NAFCU. "NAFCU believes that the FOMC willpause during the August meeting. However, an additional and final25 basis-point increase during the September meeting is probable,"said Taylor.