WASHINGTON, March 22 (Xinhuanet) -- US Federal Reserve decided Tuesday to raise the federal funds rate, the interest commercial banks charge each other on overnight loans, by another quarter percentage point to 2.75 percent.

    The rate increase in the key short-term interest rate marked the seventh consecutive time the central bank moved to tighten money supply since last June, when the federal funds rate stood ata 46-year low of one percent.

    The decision was made at a regular meeting by the Federal Open Market Committee (FOMC), the Fed's policy-making body. It also raised the discount rate by the same amount to 3.75 percent.

    In its brief statement following the meeting, the FOMC kept thelanguage that it had used with past six increases, saying "with underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured."

    That language has been seen as indicating continued quarter-point moves at the FOMC's regular meetings. Given the recent surgein oil prices, some analysts had expected that the Fed might abandon the pledge at this meeting.

    "The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity," the statement said.

    "Output evidently continues to grow at a solid pace despite therise in energy prices, and labor market conditions continue to improve gradually."

    The statement also said that "though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident."

    But the rise in energy prices has not notably fed through to core consumer prices, it said. "Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability." Enditem