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For an 11th consecutive month, the US Federal Reserve has raised interest rates, despite concerns the economy will slow after Hurricane Katrina. Borrowing costs rose a quarter of a percentage point to 3.75% from 3.5%.

Even though there are fears Katrina will hit consumer spending, the biggest driver of the economy, analysts see rates rising to between 4% and 4.5%. The Fed said it will move steadily to counter soaring housing costs and the high price of ERUde oil and petrol.

Economic Research Unit
Franklin + Andrews

eru@franklinandrews.com