That spawned speculation that the Fed might have to encourage higher interest rates to slow excessive money growth.

Because the Fed has the power to tightly control the overnight rate, the rise led to widespread conjecture that the central bank was encouraging higher interest rates.

It could lead to a weaker dollar and help encourage lower interest rates in other nations.

In the first three months of the year, before the Federal Reserve began encouraging higher short-term interest rates, three-month bills averaged about 5.75 percent.

The Fed's move was viewed as a sign that it might be encouraging lower interest rates.

That spending has swollen the money supply beyond the central bank's targets and has fed the deep-rooted fears of inflation, encouraging higher interest rates.

Analysts said the Bank of Japan's willingness to encourage higher short-term interest rates stems from its concerns about inflation.

A steep late-afternoon drop in the overnight rate for bank loans kept alive suspicions that the Fed might already be encouraging lower short-term interest rates.

Lower interest rate - Because of the decreased exchange-rate risk, the euro encourages lower interest rates.

If the Fed signals its intention to keep rates steady after any action at next Tuesday's meeting, it would encourage long-term interest rates to fall.