The Federal Reserve on Wednesday raised the interest rate to .75 per cent in an attempt to rein in the record high levels of inflation.
Officials agreed to the increase at their two-day policy meeting that wrapped on Wednesday. It is the biggest hike since 1994.
The move will increase its benchmark short-term rate, which affects many consumer and business loans, to between 1.5% and 1.75%.
The central bank has been steadily increasing interest rates in an attempt to bring down inflation, which sits at 8.6%. The high inflation rate has resulted in increased prices of food, gas and housing - areas that affect most Americans.
Chairman Jerome Powell had suggested last week such a hike was coming.
The hikes have led to increased borrowing costs with the average 30-year fixed mortgage rate topping 6%.
The Fed raised rates by a half-percentage point last month, the first such increase since 2000, to a range between 0.75% and 1%. The Fed last raised rates by 0.75 percentage point at a meeting in 1994, which was done to combat inflation.
Ahead of Wednesday's announcement, U.S. stocks and bonds were up on the presumption the fed would raise the interest rate.
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