Michael Race Business and economics reporter
Interest rates in the US have gone up for the first time in more than three years, and further increases could follow as officials try to slow the pace of price rises.
On Wednesday, the Federal Reserve unanimously raised its benchmark rate to 3.75%-4% from 3.5%-3.75%. The decision came despite strong opposition from President Donald Trump, who had called for rates to be cut.
Fed Chair Kevin Warsh said the increase was needed because "inflation is too high and has been for too long". He called it a "sober" and "responsible decision". Trump responded that rates "should be 1%, or less, because we are the Best Credit in the World – BY FAR".
When rates rise, borrowing costs go up for loans, mortgages and credit cards, while savings accounts tend to offer better returns. Central banks typically raise rates when inflation runs high, aiming to discourage spending and encourage saving, which can ease the upward pressure on prices. It is a balancing act, though. Higher rates can also make businesses delay investment and slow economic growth.
Oil prices worldwide have jumped since the US-Israel war with Iran began, pushing up fuel costs and the price of many goods and services. Despite that, Warsh said the US economy was in a strong position, and that was one of the things which encouraged the Fed to cut rates.
Our live coverage of the interest rate decision has ended, but you can read more about the increase, the political reaction and the outlook for the US economy here.
