WASHINGTON -- Policy-makers at the U.S. Federal Reserve, as expected, Wednesday raised short term interest rates for a fourth time this year. The central bank lifted the target for the federal funds rate to 2 percent from 1.75 percent.
The funds rate is the interest that banks charge each other on overnight loans and is the Fed's primary tool for influencing economic activity
Analysts noted the quarter-point increase in the funds rate would mean commercial banks' prime lending rate, the benchmark for many short-term consumer and business loans, would climb to 5 percent from its current 4.75 percent.
Both the federal funds rate and the prime rate would still be considered low by historical standards, experts said.
Speculation the Fed would hike the rate grew after the Labor Department on Friday said employers hired workers at the fastest clip in six months in October, lifting non-farm payrolls by 337,000 in October, more than twice the revised increase posted in September.
Analysts said the report helped validate the Federal Reserve's view that the economy is regaining traction and making the central bank less likely to halt its campaign of interest-rate increases.
