US interest rates rise to 2.75%

Tuesday, March 22, 2005

U.S. Federal Reserve raises interest rates

The U.S. Federal Reserve (Fed) today raised interest rates by 0.25 of a percentage point to 2.75 percent. The increase in the federal funds rate, the interest that banks charge each other, is seen as an anti-inflationary measure and was widely expected by the financial community.

It is the seventh time the Fed has raised interest rates since June 2004 when rates stood at just 1 percent -- a 46-year low.

The U.S. economy has been gaining strength since the economic downturn in 2001 and 2002. The rebound was largely fueled by historically low interest rates which enabled consumers to borrow much more money than they would have otherwise -- thus boosting personal consumption.