Fed bumps up crucial interest rate
Move signals recovery moving along well enough
By TONY PUGH
Knight Ridder Tribune News
WASHINGTON - The Federal Reserve on Tuesday pushed its benchmark short-term interest rate up a quarter-point to 1.5 percent, reaffirming its belief that the economy is recovering despite July's weak job growth figures.
The move is just the second rate increase in four years, and it signals the Fed's intent — for now — to stay true to its projected course of dampening inflation through small interest-rate increases as the economy strengthens and job creation picks up.
Analysts expected the move, but some thought the Fed might forgo a rate increase given two straight months of disappointing job growth. July's 32,000 new jobs were the weakest monthly result since December, and only a fraction of the 200,000-plus new jobs that had been predicted.
In addition, the U.S. Labor Department reported Tuesday that U.S. worker productivity rose at an annual rate of only 2.9 percent in the spring, the smallest growth rate since the fourth quarter of 2002....cont'd
http://www.chron.com/cs/CDA/ssistory.mpl/business/2729583
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