Fed Hikes Target Rate to 3.75%

The Federal Open Market Committee has raised its target for the federal funds rate by 25 basis points to 3.75%, indicating that while Hurricane Katrina has "increased uncertainty," its effects "do not pose a more persistent threat" to the economy.According to RBS Greenwich Capital chief economist Stephen Stanley, "the FOMC is taking the position that the energy price spike" resulting from the hurricane "will either be strictly temporary, or, if it persists, that it will not be enough to substantially dampen economic growth for more than the 'near term'." The FOMC is the monetary policy arm of the Federal Reserve Board. The Fed can be found online at http://www.federalreserve.gov.