Fed Halts Party.

• Author: Doherty, Brian
• Position: Interest rates rise - Brief article

INCREASES IN the "federal funds" interest rate--that is, the rate at which banks lend each other money held at the Federal Reserve--tend to trigger rises in commercial interest rates. Since 2006, when it began a slow decline from a high of 5.25 percent, the Fed has kept that rate either stable or sinking. But in December, the central bank finally announced its intention to raise the targeted interest rate from zero to 0.25 percent and then on to 0.5 percent over the next few months, assuming inflation rates continue below their 2 percent target and employment remains satisfactory.

Sectors of the economy that came to rely on the past decade's extraordinarily low interest rates by racking up huge debt loads may face trouble. One of the biggest institutions dependent on super-low rates continuing is the highly indebted U.S. government...