The Federal Reserve Board lifted interest rates again Tuesday, bidding to preempt inflation by slowing economic growth, calming the nervous bond market, and steadying the dollar.

In a bold announcement coinciding with a meeting of the Federal Open Market Committee the Fed said it had increased the discount rate immediately on loans to member banks, to 3.5% from 3%. It similarly raised its target for the overnight loan rate on bank reserves, the federal funds rate, to 4.25% from 3.75%.

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