US Federal Reserve raises interest rates by quarter point

(c) Sky News 2017: <a href="">US Federal Reserve raises interest rates by quarter point</a>

The US Federal Reserve has raised interest rates by a quarter of a percentage point - the second rise in three months.

It is only the third time rates have been hiked since the 2008 financial crisis and comes as the world's biggest economy sees steady economic and jobs growth.

The change - which was widely expected - increases rates to a range of 0.75% to 1%.

Policy makers stuck to their previous outlook that there would be two more hikes this year.

US shares saw gains and the dollar slipped back on the lack of any suggestion that rate rises might accelerate.

The Fed's projections also saw the US economy growing by 2.1% in 2017, unchanged from its December forecast.

Official jobs figures published on Friday - which were better than expected - cleared the way for the latest rate hike.

Steadily increasing rates are a sign that the US is gradually being weaned off the stimulus of cheap borrowing costs that helped nurse it back to health after the recession.

Fed chair Janet Yellen said: "The economy continues to expand at a moderate pace."

Prospects for growth - and inflation - have been bolstered by Donald Trump's plans for tax cuts and a major programme of infrastructure spending.

Economists think the next Fed hike will come no earlier than June as the central bank will want time to assess the likelihood that Mr Trump's plans will be passed by Congress.

Rising US rates have global repercussions especially for developing countries most vulnerable to higher dollar borrowing costs.

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