Federal Reserve hikes interest rates for 1st time since 2006

The U.S. central bank began raising interest rates today from record lows, as it hiked its benchmark rate by a quarter of a percentage point. The Federal Reserve raised the range for its federal funds rate to between 0.25 and 0.5 per cent on Wednesday, the first time America's central bank has raised its benchmark rate since 2006. The increase in interest rate by Federal Reserve, the central bank of the United States was on the expected lines. The Fed’s benchmark interest rate has been pegged at 0-0.25 per cent since December 2008. The last time the Fed actually raised rates was June 2006.

The move is likely to cause ripples around the world, and could increase pressure on the UK to raise rates. It could also mean higher borrowing costs for developing economies, many of which are already seeing slow growth. There are concerns that a rise will compound that slowdown, as higher rates in the US could strengthen the dollar, the currency in which many countries and companies borrow.