Interest Rates in US Begin to Increase Again | Business Headlines

The Federal Reserve – the US central bank known as the Fed – has recommended its programme of interest rate increases.

The rate has been increased by 0.25 percentage points in an effort to further bring down inflation.

The Fed had decided to hold interest rates last month, after 10 consecutive rises, as inflation fell in May to its slowest pace in more than two years.

Thursday’s rise comes despite the rate of price rises dropping further – to 3% in the year up to May – as the Fed seeks to bring inflation down to its 2% target.

Following the Fed’s announcement, US interest rates stand at 5.25% to 5.5%, a high not previously seen since 2006 and up from 5% to 5.25% before the announcement.

In the US, the interest rate is a range, rather than a single percentage – unlike the UK – because the Fed does not set a specific figure. Instead, the figures are a target rate to guide lenders.