US Federal Reserve increases interest rates for first time since 2006

America's central bank has increased rates by 0.25%

US Federal Reserve increases interest rates for first time since 2006

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The US Federal Reserve has increased interest rates by 0.25% after seven years at near zero.

America's central bank had slashed the cost of borrowing during the downturn to try to help the world's biggest economy recover.

They have not been increased since 2006.

The decision by the Fed's rate-setting committee was unanimous. They have taken action because they judge that the US economy is now strong enough to be weaned off the life support of low rates that have sustained the recovery.

Markets are expecting that the hike is the first of a series of increases by the central bank into next year as monetary policy returns to normal.

The committee said that allowing for these "gradual adjustments" economic activity would continue to expand at a moderate pace and the jobs market would continue to strengthen.

But it also indicated that economic conditions were likely to develop in a manner that meant rates would increase only gradually and would remain "for some time below levels that are expected to prevail in the longer run".