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To: calgal who wrote (135115)	6/30/1999 2:38:00 PM
From: Shadow	Respond to of 176387

News NEW YORK (CNNfn) - The Federal Reserve Wednesday raised its key short-term interest rate by a quarter point to 5 percent. But the policy-making Federal Open Market Committee changed its tightening bias toward a neutral stance, indicating that it is not leaning toward another rate hike any time soon. The quarter-point increase in the federal funds rate -- the rate at which banks borrow surplus reserves from one another - was widely anticipated by economists and investors. It comes amid growing concern that the white-hot U.S. economy will be unable to suppress inflationary factors for much longer. The U.S. central bank maintained its discount rate, or the rate at which the Fed lends banks money, at 4.50 percent. The closely-watched fed funds rate has been 4.75 percent since last November when the Fed enacted the last of three successive rate cuts in the wake of the Russian financial crisis. However, with global economies stabilizing and the U.S. economy growing at what many economists believe is an unsustainable pace, FOMC members - including Federal Reserve Chairman Alan Greenspan -- expressed concern in recent weeks that a pre-emptive strike against inflation might be necessary. Typically, a higher fed funds rate means higher rates for things such as mortgage loans, credit cards and savings accounts -- and has historically stunted corporate earnings growth and, therefore, stock prices. But U.S. markets have risen sharply in recent days as investors bet the rate increase was already built into stock prices.