Fed seen likely to raise rates

WASHINGTON — Federal Reserve policy-makers, wanting to prevent a broader outbreak of inflation as oil prices surge, are likely to keep pushing short-term interest rates higher.

The Fed is poised to boost its key federal funds rate by one-quarter percentage point to 2.75 percent today. That would mark the seventh increase of that size since June 2004.

“I don’t see any real reason why they would make any radical changes right now,” said Paul Kasriel, chief economist at Northern Trust Co.

While economists consider Tuesday’s expected increase a largely foregone conclusion, there’s intense interest — and mixed opinions — on what signals, if any, Fed policy-makers may offer about the future course of rates.

The Fed, after each meeting, issues a brief statement that usually provides an explanation of a given interest rate decision as well as some thoughts on the economy. Fed watchers examine the statement for hints about future monetary policy.

Some economists predict the Fed will follow today’s expected rate increase with quarter-point boosts at both the May and June meetings, which would leave the funds rate at 3.25 percent. Then the Fed would pause and take a wait-and-see attitude toward any further moves.

Others, however, believe the Fed will keep lifting the funds rate through much of this year, pushing the rate up to around 4 percent.