WASHINGTON, June 30 (Xinhuanet) -- The US Federal Reserve (Fed) decided on Thursday to raise the federal funds rate, which commercial banks charge each other on overnight loans, by another quarter percentage point to 3.25 percent from 3 percent.

    This is the ninth consecutive action that the US Fed has taken to tighten credit since June 2004, when the nation's benchmark interest rate stood at a 46-year low of one percent.

    In its announcement of the decision after a two-day meeting, the Federal Open Market Committee (FOMC) -- the policy-making bodyof the US Fed, retained a pledge it has been making for the past year to move the interest rates up "at a pace that is likely to bemeasured," a phrase that has been read by financial markets as signalling continued quarter-point moves in the future.

    "Although energy prices have risen further, the expansion remains firm and labor market conditions continue to improve gradually," FOMC said in the statement.

    "Pressures on inflation have stayed elevated, but longer-term inflation expectations remain well contained," it said.

    "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," the Fed added.

    "Nonetheless, the committee will respond to changes in economicprospects as needed to fulfill its obligation to maintain price stability," the statement said.

    The FOMC also approved an increase of 25-basis-point in its discount rate, the rate the US Fed charges on overnight loans to banks, to 4.25 percent.

    The US government reported on Wednesday that the overall economy grew at a healthy annual rate of 3.8 percent in the first quarter of this year and many analysts believe that US economic growth in the current quarter will be only slightly slower than that pace. Enditem