FOMC increases target rate to 5 percent

The target for the federal funds rate was increased by 25 basis points to 5 percent at the May 10 meeting of the Federal Open Market Committee.

The FOMC noted that economic growth has been quite strong so far this year and the committee sees growth as likely to moderate to a more sustainable pace, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

"As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain …