Fed announces smaller rate rise as inflation cools

The US central bank has raised interest rates again as it tries to stamp out the forces helping to cause soaring prices in the world's largest economy.

The Federal Reserve said it was raising its key rate by 0.25 percentage points.

That marks the smallest increase since last March, as the Fed steps back from last year's aggressive rate hikes.

But officials warned that they did not think they were finished raising rates, despite signs that price increases in the US are slowing.

"Inflation has eased somewhat but remains elevated," the bank said in a statement. "The Committee anticipates that ongoing increases in the target range will be appropriate."

By pushing up borrowing costs, the Fed is trying to cool the economy and ease the pressures pushing up prices.

The bank's moves are closely watched around the world as the US drives a global shift after years of low interest rates that followed the financial crisis.

The Bank of England and European Central Bank are expected to announce their own rate increases on Thursday.

The rate rise announced by the Fed on Wednesday increases its benchmark rate to a range of 4.5%-4.75% - the highest since 2007.