Fed raises interest rates another quarter-percent.

By William Neikirk, Chicago Tribune Knight Ridder/Tribune Business News

Feb. 3--WASHINGTON -- The Federal Reserve raised short-term interest rates another notch on Wednesday as it stuck to its plan to gradually lift borrowing costs to keep inflation under control as the economy grows.

The central bank pushed up its key overnight bank-lending rate by one-quarter percentage point to 2.5 percent, the sixth increase since June. The Fed is expected to continue a strategy of modest hikes for much of 2005.

Economists said that so far the central bank's efforts to bring short-term interest rates to a more normal level appears to be working, as the economy continues to grow at a steady but unspectacular …