US makes biggest interest rate rise in almost 30 years

The US central bank has announced its biggest interest rate rise in nearly 30 years as it ramps up its fight to rein in soaring consumer prices.

The Federal Reserve said it would increase its benchmark rate by three quarters of a percentage point, pushing its target range to 1.5% to 1.75% - the highest level since 2019.

The rise, the third since March, comes after inflation surged unexpectedly last month.

More rises are likely, the bank said.

Forecasts released after the meeting showed officials expect interest rates could reach 3.4% by the end of the year, a move that will ripple out to the public in the form of higher borrowing costs for mortgages, school loans and credit cards.

As central banks around the world take similar steps, it marks a massive change for the global economy, where businesses and households have enjoyed years of low cost loans.

"Most advanced economy central banks and some emerging market central banks are tightening policy in sync. That is a global environment that we've not been accustomed to in the past few decades, and that will represent ramifications for the business sector and for consumers throughout the world," said Gregory Daco, chief economist at strategy consulting firm EY-Parthenon.