Fed raises key rate to highest level since 2001

The Federal Reserve voted Tuesday afternoon to raise the federal funds rate the interest that banks charge each other to 3.75 percent. That’s the 11th straight time the funds rate has been hiked, and it’s the highest the rate has been since the summer of 2001. In a brief statement explaining the action, the Fed also dispelled speculation that Hurricane Katrina would have long-term effects on the national economy. The Fed, in its statement, said the hurricane “will be a setback in the near term” only.