Worried that high energy costs could spread inflation throughout the economy, Federal Reserve policymakers this month decided they should keep pushing interest rates higher.

Minutes of the Fed’s closed-door meeting on November 1, released yesterday, underscored that policymakers were more concerned about the prospects of resurgent inflation than a serious economic slowdown after a trio of deadly hurricanes.

Even though energy prices, which surged to record highs after Hurricane Katrina struck in late August, had moderated by then, “risks to the outlook for underlying inflation remained a key concern,” according to the minutes.

“There was a risk that the large cumulative rise in energy and petroleum product prices through the summer would be transmitted to core consumer prices,” the minutes said.

Core prices, which exclude energy and food, are closely monitored by the Fed to get a sense of how a wide variety of prices for goods and services are behaving.

“A number of firms had been reporting a greater ability to pass through increases in energy and other costs to customers, though evidently more so to other businesses than to consumers,” the minutes said.

To fend off inflation, the Fed at the November meeting did in fact boost its key short-term rate, called the federal funds rate, by a quarter percentage point to 4%, the highest in more than four years. It marked the 12th increase of that size since the Fed began to tighten credit in June 2004.

The federal funds rate, the interest that banks charge each other on overnight loans, influences other interest rates, including banks’ prime lending rate used for consumer and business loans.

On Wall Street, investors were encouraged by the Fed’s take on the economy. The Dow Jones closed up 51.15 points.

According to the minutes, policymakers felt fairly confident that the economy was weathering the blow of the hurricanes.

“The economy seemed to be growing at a fairly strong pace, despite the temporary disruptions associated with the hurricanes,” the Fed document said.

The minutes said that all Fed policymakers believed it was important to keep raising rates “in order to check upside risks to inflation.”

Still, rate decisions would be “increasingly sensitive to incoming economic data,” the minutes said. “Some members cautioned that risks of going too far with the tightening process could also eventually emerge.”

Wall Street investors were especially comforted by this language, believing it might be a signal that the Fed’s rate raising campaign could be drawing to a close in the months ahead.

Some economists, however, think the Fed has more work to do to keep inflation under control.” I think it is onward and upward for Fed rate hikes,” an economist at Argus Research, Richard Yamarone, said.

He and other analysts expect the Fed to bump up rates again at its next meeting, December 13, the last of this year.

Another increase could come on January 31, which would be the last meeting for Fed Chairman Alan Greenspan, who will retire that day after 18-plus years at the helm. His successor is Ben Bernanke, a former Fed member who is currently the White House’s top economist. His first Fed meeting as chairman is expected to be March 28.