Borrowing costs rose a quarter of a percentage point to 3.75% from 3.5%.
Even though there are fears Katrina will hit consumer spending, the biggest driver of the economy, analysts see rates rising to between 4% and 4.5%.
The Fed added it would move steadily to counter soaring housing costs and the high price of crude oil and petrol.
"Higher energy and other costs have the potential to add to inflation pressures," it said in a statement.
"However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained."
'Set back'
Quarter-percentage-point rate increases are expected to keep a lid on price growth without slamming the brakes on the economy, analysts said.
Economic growth in the US this year is forecast at between 3.5% and 3%.
It seems there was a fairly robust debate about the pros and cons of moving or not
Ian Morris, HSBC
Officials have estimated that Hurricane Katrina, which ripped through the Gulf coast and sent crude oil and petrol prices to record levels, could knock as much as half a percentage point off growth.
While any slowdown in expansion is a worry, analysts said the economy is showing signs of being robust enough to shake off the ill effects.
In its statement, the Fed said Katrina would be a short term setback, but did not see it as "persistent threat".
"The widespread devastation in the Gulf region, the associated dislocation of economic activity and the boost to energy prices imply that spending, production and employment will be set back in the near term," the bank said.
'Sticking to its guns'
Importantly the Fed kept key words unchanged in its statement, language the financial market has been using to determine the central bank's stance on future rate increases.
The Fed reiterated that borrowing costs were "accommodative", signalling there was room to make further changes, analysts said.
However, any increase in rates would come at "a pace that is likely to be measured", the Fed said.
The US economy is giving Mr Greenspan plenty to ponder
"The Fed still thinks short-term interest rates are low enough to be pushing the economy so they are continuing to remove monetary stimulus at a pace that is likely to be measured."
Borrowing costs have climbed from a 46-year low of 1% in June 2003.
However, the decision to raise rates was not unanimous, with Fed Governor Mark Olson calling for borrowing costs to be left unchanged.
"It seems there was a fairly robust debate about the pros and cons of moving or not," said Ian Morris of HSBC.
But they believe Katrina is a short-term disruption and "are likely to keep raising rates", he added.
Federal Reserve HQ in Washington, D.C.
The US Federal Reserve has just raised the base rate of interest for the 11th month in a row, despite concerns that the economy will slow after Hurricane Katrina.

The rate rose by a quarter of a percentage point to 3.75%, but analysts have predicted it may rise to 4.5% in the coming months, in spite of consumer spending being down. The Fed says it is hoping to counter soaring house prices and the high price of oil. 

Economic growth in the US this year is forecast at around 3.3%, but government officials estimate that 0.5% growth could be lost due to Hurricane Katrina.

However, analysts are confident that the economy is robust enough to withstand and shake off the effects of high oil prices and unemployment caused by Hurricane Katrina.