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Last Updated: Tuesday, 20 September 2005, 18:01 GMT 19:01 UK
Fed lifts interest rate to 3.75%
The US Federal Reserve has raised interest rates for an 11th consecutive month, 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 has said it will move steadily to counter soaring housing costs and the high price of crude oil and petrol.

Economic growth in the US this year is forecast at between 3.5% and 3%.

Analysts and government officials have estimated that Hurricane Katrina, which ripped through the Gulf coast and sent crude oil and petrol prices to record levels, could knock as much as half a percentage point off growth.

While any slowdown in expansion is a worry, analysts said that the economy is showing signs of being robust enough to shake off the ill effects.

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