As expected, US Federal Reserve policymakers boosted their target for a key short-term interest rate another quarter point Tuesday to 2.75%, to try to keep inflation contained without harming the economy.

It is the seventh quarter-point increase since the Fed started raising rates last June, when the funds rate stood at a 46-year low 1%.

Commercial banks' prime lending rate, benchmark for millions of consumer and business loans, is expected to quickly rise a quarter-point to 5.75%.

The Fed, as it has before, not only raised its target for the federal funds rate �� what banks charge each other for overnight loans, it also raised the discount rate, which it controls directly, a quarter point, to 3.75%. The discount rate is what banks pay to borrow directly from the Fed.

While a quarter-point rate hike was widely expected, analysts said there was more attention on the wording the Fed used to explain its actions.

The focus was on the word "measured," which the Fed has used since it began boosting rates to signal that it intended to move rates higher at a gradual pace. They used it again Tuesday.

Speculation that the Fed might drop its pledge to move rates at a "measured" pace was sparked last month when Fed Chairman Alan Greenspan in congressional testimony did not use the word "measured" to describe the Fed's future intentions.

Some analysts expected the Fed to modify the pledge by adding some sort of qualifying phrase that would signal that the central bank was poised to start raising rates more quickly.

"The Fed is getting a little worried about inflation," says David Wyss, chief economist at Standard & Poor's in New York.

Indeed, in their statement Tuesday, policymakers said, "pressures on inflation have picked up in recent months and pricing power is more evident." But they softened that somewhat by saying: " The rise in energy prices, however, has not notably fed through to core consumer prices."

Source: Agencies