WASHINGTON -- The Federal Reserve is poised to raise borrowing costs yet again.
The increase -- intended to keep the economy on an even keel -- is expected today as Alan Greenspan, the second-longest serving chairman, ends his era at the central bank after 18 years. Greenspan will turn the reins over to Ben Bernanke, who was chairman of President Bush's Council of Economic Advisers. The Senate is expected to confirm Bernanke's nomination today.
At today's meeting, the Fed is expected to add one-quarter of a percentage point to a key short-term interest rate known as the federal funds rate. That would put the funds rate, the interest banks charge each other on overnight loans, at 4.50 percent, and would mark the 14th increase since June 2004.
In response, commercial banks would raise their prime lending rate -- for certain credit cards, home equity lines of credit, and other loans -- by a corresponding amount to 7.50 percent.