"The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-3/4 percent. In a related action, the Board of Governors approved a 25-basis-point increase in the discount rate to 5-3/4 percent.""The slowing of the growth of real GDP in the fourth quarter of 2005 seems largely to have reflected temporary or special factors. Economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace."

"The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance."

"The Federal Reserve is indicating at least one more rate hike, according to analyst Peter Cardillo. 'There is very little change in the statement and the fact that they didn't elaborate on the slowing housing market means that they remain focused on the possibility of higher intermediate good prices.'"

"The Fed's move gives the U.S. the highest central bank rate among the Group of Seven industrial countries, surpassing the Bank of England's 4.5 percent benchmark. The Fed's rate is 2.25 percentage points above the European Central Bank's refinancing rate and 1 percentage point higher than the Bank of Canada's overnight rate. The Bank of Japan's rate is close to zero."

"The Fed's cycle of increases has lasted longer than most forecasters expected: A year ago, economists predicted the rate would be 4 percent this month. The central bank's next two interest-rate meetings are scheduled for May 10 and June 28-29."

"The Fed's goal has been to reach a neutral level for the funds rate, the point where interest rates are neither stimulating nor depressing economic growth. Many analysts believe the Fed is very close to that level but may feel the need to push the funds rate up one more time to 5 percent from moving to the sidelines for the rest of the year."

"However, other analysts who are more worried about inflation pressures said the Fed may feel the need to boost rates not only at the next meeting on May 10 but also at perhaps two more meetings after that, leaving the funds rate at 5.5 percent. Analysts who believe the Fed will push rates higher are more worried that the surge in gasoline prices and tight labor markets will soon start showing up in increased inflation pressures."

"'The real question is not what he does, but what he says,' said David Wyss, chief economist at Standard & Poor's. Lyle Gramley, a former Fed board member said he believes the central bank will keep lifting rates until there are definite signs the economy is slowing. 'A combination of a downturn in housing and a slowdown of consumer spending should do the trick, but the Fed does not know for sure right now whether that will occur,' Gramley said."

"European Central Bank president Jean-Claude Trichet said the ECB favours a 'gradual and measured' response to inflation shocks. He said the ECB will continue to carefully monitor all risks to price stability. 'Clearly we have a number of indications that require careful monitoring and, among these, the ones pertaining to housing market developments,' he said."

"'The buoyant loan and house price developments at the euro area level warrant close and continued monitoring, not least as they could imply a risk of price misalignments,' he said. The ECB started raising rates in December and economists expect further rate increases over the course of this year. "

"The ECB therefore does not react to the immediate or first round effects of such shocks, but concentrates on preventing the transmission of these effects to other sectors of the economy, he said."