As widely anticipated by economists, the U.S. Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2.5%.

That’s the sixth increase by the Fed in as many meetings.

The Fed’s accompanying policy statement was virtually unchanged from the previous policy meeting on Dec. 14, 2004.

“Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions continue to improve gradually,” the Fed said today.

It added that inflation remains in check. “Inflation and longer-term inflation expectations remain well contained,” it said.

The Fed said upside and downside risks for both sustainable economic growth and stable prices remain balanced for the next few quarters.

“With underlying inflation expected to be relatively low, the committee believes that policy accommodation can be removed at a pace that is likely to be measured,” it said..

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

A clearer outlook for U.S. interest rate policy is expected to emerge on February 16-17 when Fed Chairman Alan Greenspan is scheduled to testify before Congress and the Fed releases its semiannual monetary policy report.

U.S. stocks were barely budged after the Fed’s announcement.