LEAD: Fed raises key interest rate by 0.25 point to 1.75%.

Japan Weekly Monitor, September, 2004

WASHINGTON, Sept. 21 Kyodo

(EDS: UPDATING WITH DETAILS)

The U.S. Federal Reserve Board raised its key short-term interest rate by 0.25 percentage point to 1.75 percent Tuesday, saying, ''Inflation and inflation expectations have eased in recent months'' despite rising oil prices.

The widely expected step represented the third 0.25 point rate hike in the target for the federal funds rate since June 30, when the U.S. central bank increased the key rate to 1.25 percent from a 46-year low of 1.0 percent, the Fed's first rate hike in four years.

The Fed again raised the federal funds rate target by 0.25 point to 1.5 percent on Aug. 10.

At the end of its policy-setting Federal Open Market Committee meeting, Federal Reserve...