The Federal Reserve tonight raised US interest rate for a 13th straight time and signaled that while it is not yet done raising rates, its 1-1/2 year credit-tightening campaign is winding down.
As widely expected, the US central bank's rate-setting Federal Open Market Committee voted unanimously to increase the benchmark federal funds rate by a quarter-per centage point to 4.25 per cent, the highest level since April 2001.
In a statement, the Fed dropped its long-standing characterisation of policy as accommodative, or stimulative - a recognition rates have risen to a more-normal level from a 1958 low of 1 per cent hit in mid-2003, during the tepid economic recovery.
But the Fed also repeated an expectation it would likely need to push rates up further to keep inflation at bay, suggesting at least one more quarter-point hike ahead.
"The committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance," the Fed said.
Some analysts thought the Fed would begin shifting its language to provide Fed Chairman Alan Greenspan's designated successor, White House adviser Ben Bernanke, wide latitude to shape the future policy course.
Bernanke needs just a final Senate vote of approval to take the reins on February 1st, the day after the last rate-setting meeting of Greenspan's 18-year tenure.