FED RAISES INTEREST RATES

Inflation-zapper Alan Greenspan raised key interest rates by a whopping one-half of 1 percent today. The discount rate and the federal funds rate now stand at 4 percent and 4.75 percent respectively. (Both are rates that the central bank charges banks for loans.) Private banks dutifully took Fed chief Greenspan's cue and raised their lending rates as well.While a rate hike was anticipated, its magnitude was not: previously, economists pegged the increase to 0.25 percent. Today's action has the Democrats in Congress more than slightly peeved at Greenspan. And rightly so, says TIME's Business assistant editor Bernard Baumohl. Because of Clinton's plan to cut the deficit, the current economic growth is being fueled not by government spending but entirely by private industry. Private businesses are ultrasensitive to loan-rate hikes and are likely to put any growth plans on ice. Nonetheless, Wall Street perked up at the news, rising 24 points. (See Markets below.)