Fed boosts key interest rate for 11th time

WASHINGTON -- The Federal Reserve on Tuesday boosted a key interest rate for the 11th straight time and signaled that more rate hikes were likely even as the country recovers from the devastating effects of Hurricane Katrina.

The action pushed the Fed's target for the federal funds rate -- the interest that banks charge each other -- to 3.75 percent. That's the highest level since the summer of 2001.

Some economists had believed that Katrina, the country's costliest natural disaster, might prompt the Fed to pause temporarily in its campaign to drive interest rates higher to keep inflation in check. But Federal Reserve Chairman Alan Greenspan and his colleagues said that Karina's impact on the overall economy was likely to be temporary.