The US Federal Reserve has voted to raise the target for its benchmark interest rate by 0.25%, citing solid economic expansion and job gains.
The widely-anticipated decision will lift the target for the central bank’s benchmark rate to 1.75%-2%, the highest level since 2008.
It is the seventh time the bank has raised rates since 2015.
A majority of Fed officials also said they expect two more rate rises this year, more than previously forecast.
The Fed announced the rate rise at the close of a two-day meeting in Washington.
The decision to raise rates comes as the US unemployment rate hovers at 3.8% – the lowest rate in nearly two decades – and inflation shows signs of starting to pick up.
The US consumer price index, one official measure of inflation, increased 2.8% over the year to May driven by rising petrol costs, the Bureau of Labor Statistics said this week. Excluding energy and food, the index is up 2.2%.
The Fed, which has set a 2% target for inflation, prefers to measure inflation using consumer spending figures.
By that indicator, inflation rose 2% in April or 1.8% if energy and goods are excluded.
Fed officials said further gradual increases in the rate will be consistent with “sustained economic activity” and inflation near its 2% target.