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FOMC Likely To Raise Funds Rate Again

At its next scheduled meeting, on November 1, the voting members of the Federal Open Market Committee (FOMC) are likely to again raise the influential federal funds target rate. The only question is by how much.

Since June 2004, the FOMC has been raising the funds target rate in quarter-point increments. The federal funds target rate, the interest that banks charge each other on overnight loans, is now 3.75%. Even at that level, "the federal funds rate would likely be below the level that would be necessary to contain inflationary pressures, and further rate increases probably would be required," state notes from the FOMC's most recent meeting on September 20.

Likely scenario: The FOMC will raise the federal funds target rate 25 basis points at each of its two remaining meetings this year, on November 1 and December 13.

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