The Federal Reserve Board on Tuesday boosted short-term interest rates for the 12th time in a year and a half, discounting any long-term effects on the economy from this season's hurricanes.

That decision — taken on a unanimous vote of the central bank's rate-setting committee — brought the benchmark rate to 4 percent. It was the latest action in the committee's continuing effort to head off inflation by making it more costly to borrow money.

Banks follow by quickly raising the prime rate. Charges climb for credit cards and business loans, while some home­owners with adjustable-rate mortgages face higher monthly payments.

The Fed campaign began in June 2004, when the benchmark rate was lifted from its 40-year low of 1 percent. Even after the march upward, rates remain just above the inflation rate.

Fed officials believe the economy no longer needs the extra fuel that low rates provided when growth was weak and the economy was shedding jobs.

"The amazing thing is that the interest rate has stayed so low for so long," said George Benston, professor of finance and economics at Goi­zueta School of Business at Emory University. "So it's likely they will go higher."

In an accompanying statement, the Fed hinted strongly that rate boosts would continue. Rates may keep rising "at a pace that is likely to be measured," the Fed said. That's generally taken as code for quarter-point increases.

Most economists expect similar boosts in December and probably in January, when the last meetings are scheduled before the retirement of 18-year Fed Chairman Alan Greenspan.

"I don't know what they are going to do, but what they should do is go to 4.25 or 4.5 percent," said economist and Fed watcher Allan Meltzer of Carnegie Mellon University in Pittsburgh. "That is kind of a neutral place for the Fed to end."

But Fed officials seem to want to do more than just fight inflation to a standstill; they apparently want to roll it back. That may mean continued rate boosts well into 2006.

Just how much of a problem is inflation? The Fed generally factors out energy and food — sectors where prices have mostly been rising — to calculate a core rate that reveals more about overall economic trends.

Tuesday's Fed statement sounded no alarms about inflation: "Core inflation has been relatively low in recent months, and longer-term inflation expectations remain contained."

Consumers must cope with the cost of necessities like energy and food — "core" or not — and that can dampen other household spending. Higher rates only add to their burden.

The Fed believes growth will get a boost from the rebuilding of hurricane-damaged areas during the next few months. Still, the storms effectively laid off more than 500,000 people, at least half of whom have not landed another paycheck, according to filings with the Bureau of Labor Statistics.

"There is the sense that some people are hitting the wall, and if that's true, rising interest rates will make the process worse," said economist Darel Paul of Williams College in Massachusetts. "A lot of people are borrowing more — even if they can't afford it — because they have access to credit."

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