More Rate Hikes Beckon

WASHINGTON - (09/15/04) -- Observers in the credit unionmovement widely expected the Federal Reserve to lift short-terminterest rates again at next week's meeting. "I think they're goingto raise rates," said Jeffrey Taylor, an economist with NAFCU,saying Fed governors are still concerned about rising inflation andrapid economic expansion. "The Fed needs to keep hiking to keepup," Taylor told The Credit Union Journal. The Fed is expected toadd another 25 basis points to the target rate for overnightFedFunds, which is currently 1.5%. The Central Bank added 25 bps inJune and August to lift the benchmark short-term rate from afive-decade low of just 1%. Taylor and other experts expect the Fedto keep lifting short-term rates the rest of the year and throughnext year, as well.