US interest rates set by the Federal Reserve have risen to their highest levels since 2007, but the pace of increase is slowing | Business news

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US interest rates are now at their highest levels since the global financial crisis, as the US central bank has forced an increase again as it seeks to bring down inflation.

The Federal Reserve, commonly known as the Federal Reserve, imposed a 0.50 percentage point hike in interest rates.

A widely expected rise would mean more expensive borrowing for the likes of American mortgage holders and those paying down credit card debt.

After the increase, US interest rates stand at 4.25% to 4.5%, up from 3.75% to 4% since the last increase in November.

In the US, the interest rate is a range, not a single percentage – as it is in the UK – because the Federal Reserve is not allowed to set a specific number. Instead, the target rate is set as a guide for the banks to follow.

The increase is less than the previous four hikes of 0.75 percentage point, indicating that the Fed is slowing down in its fight against inflation.

It has embarked on a program of raising interest rates to bring inflation down to its 2% target.

The pace of price increases has eased as inflation slows in the world’s largest economy. The US Labor Department reported Tuesday that prices rose 7.1% in the year through November, down from a 40-year high of 9.1% in June.

Although the Fed was resolute, it did not flinch in its campaign of hikes.

Speaking after the decision, Fed Chairman Jerome Powell said he expects there to be sustained increases and a sustainable period where the interest rate remains high.

In response to continued high inflation, rates will reach 5.1% at the end of next year, he said, half a percentage point higher than expected in September.

The Bank of England is due to announce a similar interest rate decision on Thursday. The bank is also expected to increase the cost of debt in a bid to reduce economic activity and curb inflation.

The United Nations Conference on Trade and Development had asked central banks not to increase interest rates.

The report warned that the recession, worse than what happened after the global financial crisis, may result from monetary regulators tightening policy and raising interest rates.

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