The US Federal Reserve has increased interest rates by 0.25% for the first time since 2006. In it’s statement, the committee said: “The committee judges that there has been considerable improvements in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2% objective.”
Future action will depend on how the economy moves forward and will be gradual. The Fed’s medium-term projection is for four 0.25% rate increases in 2016 and four more in 2017.
The move will likely cause ripples around the world. It could mean higher borrowing costs for developing economies, many of which are seeing slow growth.