The Federal Reserve Board yesterday raised short-term interest rates by a quarter of a percentage point, to a five-year high of 4.75 percent. The increase, the Fed's 15th since June 2004, was the first under newly minted Chairman Ben S. Bernanke.

Analysts have anticipated the increase. They noted the Fed yesterday used much of the same language employed in January, when it raised rates a quarter point at the last meeting under then-Fed Chairman Alan Greenspan. The similarities included a warning that another rate increase may be needed to maintain the balance between keeping economic growth at a sustainable pace and holding inflation in check.

The increase is good news for savers, who should see interest rates on certificates of deposit and money market funds bump up yet again. On the flip side, borrowers should see rates rise on a host of products, including credit cards, car loans, home equity lines of credit and adjustable-rate mortgages.

The Fed's action affected the federal funds rate, the rate banks charge each other on overnight loans. It stood at a 46-year low of 1 percent when the Fed began raising rates more than two years ago.

Following the Fed's move, Mellon Financial, PNC Financial Services Group and other major banks increased their prime lending rate to 7.75 percent. The prime rate is used to determine how much consumers and businesses pay to borrow.

Most observers expect the Fed to raise short-term rates to 5 percent at its next meeting May 10.

"They're basically signalling, 'Expect one more rate hike here,' and that's what we are basically expecting," said Global Insight economist Brian Bethune.

Mellon Financial chief economist Richard B. Hoey found two nuances to the Fed's statement: It did not refer to housing as a source of economic weakness and attributed fourth quarter weakness to temporary or special factors. To Mr. Hoey, that indicates the Fed is more concerned about keeping the threat of inflation in check than it is worried about the run up in interest rates spilling over into the larger economy.

From that standpoint, yesterday's announcement "was probably disappointing to those who thought the Fed would be through with today's move," Mr. Hoey said.

The Fed's action doesn't automatically lift long-term rates, such as fixed-rate mortgages. But home buyers, who have enjoyed unusually stable mortgage rates during the Fed's campaign of rate hikes, will likely see those rates move higher, too, said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.

Mr. Hoffman projects that rates on 30-year mortgages, currently averaging around 6.3 percent, will drift into the 6.75 percent range, but not above 7 percent, by Memorial Day. They will stay in the area for the rest of the year, he said.

The Fed said price increases for energy and other commodities have had only a modest effect on core inflation and that productivity gains have helped keep labor costs in check. However, the bank said inflation remains a threat because of concerns over energy prices and an unemployment rate of less than 5 percent.

Inflation isn't a concern for Charlie Smith, chief investment officer for Fort Pitt Capital in Green Tree.

"I don't think it's even very much of a definable or verifiable threat," he said.

Argus Research's Richard Yamarone is more bearish on interest rates. While many observers expect the Fed to pause after raising rates to 5 percent in May, he expects another increase 5.5 percent. The Fed has always raised rates more than necessary in order to make sure inflation has been thwarted, he said.

"The jury is still out on whether or not higher energy and raw material prices are going to feed into the general price level," Mr. Yamarone said in a note to clients yesterday.