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US raises interest rate to highest in 16 years

The US central bank has raised interest rates to the highest level in 16 years as it battles to stabilise prices, the BBC reports.

The Federal Reserve increased its key interest rate by 0.25 percentage points – its 10th hike in 14 months.

The moves have sharply raised borrowing costs across the world’s largest economy, spurring a slowdown in sectors such as housing and playing a role in the recent failures of three US banks.

The Fed signalled that Wednesday’s rise may be its last one for now.

The bank started raising interest rates aggressively last year when prices in the US were soaring at the fastest pace in decades.

The moves have pushed the target range for its benchmark rate to 5% to 5.25% – up from near zero in March 2022.

Central banks around the world, including in the UK and in Europe, have taken similar action.

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