WASHINGTON, Nov. 1 - Undaunted by back-to-back hurricanes and higher oil prices, the Federal Reserve raised short-term interest rates on Tuesday for the 12th time in a row and made it clear that more increases were on the way.
In a statement, Fed policy makers said the economic disruptions caused by hurricanes were essentially transitory and signaled that they were more worried about higher inflation than slower growth.
"Elevated energy prices and hurricane-related disruptions in economic activity," the central bank said in raising the rate to 4 percent from 3.75 percent, "have temporarily depressed output and employment."
The decision means that the Federal Reserve is almost certain to raise rates at policy meetings in December and January, and it will probably keep going after Alan Greenspan retires as Fed chairman at the end of January.
In effect, Mr. Greenspan's last act as chairman amounts to a carefully choreographed effort to shore up the Fed's credibility and gently reverse an extraordinary period of cheap borrowing.
Under Mr. Greenspan, the Fed reduced short-term rates to 1 percent in 2003 and kept them there for a year to shore up the economy. Since June 2004, the Fed has been inching rates back toward a "neutral" rate that neither stokes inflation nor stifles growth.
"The Fed is saying that 'we're being tested here, we're being tested on our anti-inflation credibility,' " said Ethan Harris, the chief economist at Lehman Brothers. "They need to sound tough. They need a pretty good bark to go with their bite."
The Federal funds rate is now at its highest level since June 2001, but it is still well below its most recent peak of 6.5 percent at the end of 2000.
The Fed continued to describe its policy as accommodative - meaning that interest rates are still low - and predicted that the economic disruptions caused by recent hurricanes and spiking oil prices would essentially be transitory. It also reiterated its desire to keep raising rates at a "pace that is likely to be measured."
Some analysts suspect that Fed officials may be contemplating the need to go beyond "neutral" and apply the brakes. Mr. Greenspan told lawmakers early this year that people would recognize a "neutral" level when they reached it. Some Fed policy makers have publicly suggested that it could be 5 percent or higher.
Thus far, the underlying rate of inflation has yet to show many signs of being pushed higher by the surge in oil prices. The Consumer Price Index in September was 4.7 percent higher than a year earlier, the biggest jump in years, but most of that was due to fuel prices.
Mr. Greenspan and most other Fed officials tend to view higher energy prices as a one-time event and pay much closer attention to the "core" rate of inflation that excludes energy and food prices.
The Fed's favorite price gauge - the Commerce Department's price deflator for personal consumer expenditures, excluding food and energy - was up 2 percent in the third quarter over the same period in 2004.
That was still mild, especially in light of surging gasoline prices, but it was at the outer limit of the comfort zone for many Fed officials.
"Those of you who lived through the 1970's will remember that higher oil prices touched off a wage-price spiral that pushed inflation into double-digit territory," said Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, in a speech on Oct. 18.
"I see no evidence of feedbacks from energy prices to wage bargaining," Ms. Yellen said. "The risk, though, is that, without appropriate policy, we could see a repetition of the 70's-type dynamic."
Recent data suggest that the economy has enough momentum to withstand higher interest rates. Last week, the government surprised many forecasters by estimating that the economy grew at a rapid clip of 3.8 percent in the third quarter, despite the impact of Hurricane Katrina and skyrocketing fuel prices.
Reconstruction efforts from the hurricanes would bolster growth, the Fed said, and it implied that there was no need to prop up the economy with lower borrowing costs.
Other data suggest that companies are passing along higher energy costs to customers with greater ease.
On Tuesday, the Institute for Supply Management reported that its index of manufacturing activity rose sharply in October, but that factories also reported a big jump in the prices they had to pay for parts and materials - partly a reflection of the rush by companies to stock up on supplies after the hurricane. The institute said its index for prices paid by companies climbed to its highest level since June 2004.
"It's clear at the business-to-business level that we are getting greater pass-throughs of higher energy prices to customers," said Nigel Gault, chief United States economist for Global Insight. "Some of that is going to be passed on to consumers."
In its statement, the central bank sounded much the same note as Ms. Yellen - watchful but not panicked about inflation, and still fairly confident that the economy and employment would continue to grow at a respectable pace.
"The cumulative rise in energy and other costs have the potential to add to inflation pressures," the central bank said. "However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained."
Despite the seemingly calm language about inflation, many analysts viewed the Fed's declaration as a hawkish warning that rates could go considerably higher.
"With higher inflation still a tangible threat, officials cannot rule out the possible need to move beyond neutral," wrote Robert V. DiClemente, a senior economist at Citigroup.
In contrast to the last policy meeting on Sept. 20, when Fed governor Mark W. Olson dissented and voted against a rate increase, the vote on Tuesday was unanimous.