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The economy grew less than expected in the fourth quarter, adding to questions about whether the

Federal Reserve

is prepared to take a more aggressive approach to raising interest rates.

Gross domestic product rose 3.1% in the final three months of the year, much less the 4% pace of the third quarter. Economists had expected growth of 3.6%.

The government said the slowdown in growth reflected higher imports and lower exports.

For the year, the economy grew at a 4.4% pace, vs. a 3.0% clip in 2003.

Inflation, however, picked up in the quarter, posting a 2.5% rate vs. a 1.3% rise in the third quarter.

The central bank meets to decide on rates next week. Minutes of the FOMC's last meeting suggested that members of the panel appeared more concerned about a pickup in inflation than they were in previous months.

The fed funds rate stands at 2.25%, after five quarters of a percentage point hike since late June.