Federal Reserve Raises

Key Short-Term Interest Rate

Federal Reserve officials raised a key short-term interest rate for the first time in four years and signaled that they would probably nudge rates higher as the economy grows stronger.

Rate increases could become more aggressive if inflation pressures continue to build, officials indicated. But in a statement issued at the conclusion of their two-day meeting in Washington, the policymakers said they can raise rates "at a pace that is likely to be measured," because they expect inflation to remain "relatively low."

The 12 members of the Federal Open Market Committee voted unanimously to lift their target for the federal funds rate -- which influences borrowing costs throughout the economy -- to 1.25 percent from 1 percent, where it had been for the past year. Financial markets had little reaction to the announcement.

The Fed is raising the rate not to slow the economy, but rather to ensure that it does not grow so rapidly that inflation takes off, officials said.

-- Nell Henderson

Supreme Court Rules Against

Bush on Prisoners' Rights

The Supreme Court struck down key elements of the Bush administration's legal policy for its battle against terrorism, ruling in two cases that the executive branch does not have the authority to deprive accused members of al Qaeda or the Taliban of their liberty without giving them a day in court.

The court said the president may order a U.S. citizen detained as an "enemy combatant" -- but rejected the administration's expansive interpretation of that authority, ruling that such detainees are entitled to contest the government's case against them.

The court also ruled that each of the 595 alleged members of al Qaeda and the Taliban being held at the U.S. naval base in Guantanamo Bay, Cuba, has the right to ask a U.S. judge to set him free.

In a third case -- that of Jose Padilla, a U.S. citizen who is accused of taking part in an al Qaeda plot to explode a radiological bomb in the United States -- the court ruled that he would have to resubmit his petition for habeas corpus because his attorney had filed it in the wrong court.

-- Charles Lane

Tactic to Sidestep

'Miranda' Is Rejected

In other important decisions in the last week its term, the Supreme Court:

* Ruled that police officers may not deliberately avoid warning suspects of their right to remain silent before beginning questioning, asserting that a law enforcement tactic of interrogating suspects twice -- before reading them their rights and then after -- undermines the familiar Miranda right to remain silent.

The 5 to 4 decision affirms the right of suspects not to speak to investigators and is intended to end what the court said was an increasing police practice of questioning suspects twice in the hope of eliciting a confession. The decision rejects what the court called "a police strategy adapted to undermine the Miranda warnings."

The justices also ruled that prosecutors may use physical evidence against a suspect even if it was obtained by officers who had not given the suspect a warning.

* Agreed to extend a ban on the enforcement of a federal law designed to shield minors from Internet pornography, ruling for the third time in seven years that a congressional effort to curb online obscenity threatens free speech.

By a vote of 5 to 4, the court held that the government still has not proved that criminal penalties imposed on certain sexually oriented Web sites by the Child Online Protection Act protect children without unduly limiting options for adults. The court sent the case back to a federal district court in Pennsylvania for trial, leaving an injunction against COPA's enforcement in place pending the proceedings there.

-- Jerry Markon

and Charles Lane

Astronauts Successfully

Repair Space Station

In their second attempt in a week, American and Russian astronauts succeeded in fixing a faulty gyroscope aboard the international space station. The earlier effort had to be aborted because of a spacesuit malfunction.

A little more than 21/2 hours after the spacewalk began June 30, astronauts Edward "Mike" Fincke and Gennady Padalka replaced the circuit breaker that had disabled the gyroscope. Ground controllers ran a quick test and confirmed it was working properly.

The repair required two 45-minute treks between the Russian and American sides of the space station.

-- Shankar Vedantam

Hemophilia Drug Shows

Promise in Treating Strokes

A hemophilia drug sharply cuts the chances that victims of the most devastating type of stroke will die or be severely disabled, providing the first possible treatment for brain hemorrhages, researchers reported.

An international study involving 400 patients found that a single infusion of the drug, a synthetic version of a naturally occurring protein, given within three hours after onset cut by about one-third the risk of death or severe disability among patients in the midst of a bleeding stroke. This type of stroke hits about 80,000 Americans each year and about 2 million people worldwide.

-- Rob Stein

Court Rules Section of Fence

Violates Palestinian Rights

The Israeli Supreme Court ruled that one of the most contentious sections of Israel's massive fence complex through the West Bank violates the human rights of thousands of Palestinian residents by separating them from their jobs and farmlands and making their daily lives miserable.

The Israeli Defense Ministry said it would reroute the disputed section.

Although the ruling covered only a fraction of the planned barrier system of fences, walls, concertina wire and patrol roads, attorneys said the court's decision is likely to have far-reaching impact on the project, which the Israeli government has said is necessary to curtail the ability of Palestinian suicide bombers to enter Israel.

The court said that just over 18 miles of the planned route, which snakes around Palestinian villages northwest of Jerusalem, should be redrawn. The ruling described a part of the fence near the village of Beit Sourik as "a veritable chokehold, which will severely stifle daily life."

-- Molly Moore