Reuters: Fed Seen Sticking to Measured Rate Raises

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By Tim Ahmann

WASHINGTON (Reuters) - The U.S. Federal Reserve will take another small step this week toward raising interest rates to more normal levels, but may be getting rates up to a point that allows for a pause in increasing them, analysts say.

Fed officials gather on Tuesday and are widely expected to raise overnight borrowing costs, which influence rates across the economy, by a quarter-percentage point to 1.75 percent.

It would mark the third small rate increase since the Fed began tightening monetary policy in June.

While the U.S. economy lost some momentum in recent months, Fed policymakers have expressed confidence it has entered a self-sustaining expansion and no longer needs the ultra-low rates that were used to battle recession and a weak recovery.

"Our main direction is up," Fed Governor Susan Bies said last week. As Bill Cheney, chief economist at MSC Global Investment Management, puts it: "They'd like to take their foot off the gas pedal."

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http://www.reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=6273059