US Federal Bank Raises Interest Rate by 0.5%, Hitting Highest Level in 15 Years

On Wednesday, the US Federal Reserve raised interest rates by half a percentage point in its last review for the year, a less radical hike than the previous four consecutive ones of 0.75%. 

The US base interest rate, the level the central bank charges commercial lenders for borrowing money, now stands at between 4.25% and 4.5%. These rates are far lower than the rates ordinary people tend to pay on their mortgages or loans, and slightly lower than the rates they recoup on savings, but they have a decisive impact on the interest payments of ordinary people all the same.

The move is seen as a sign that the US economy is recovering from this year's inflationary pressure. Analysts are hopeful it could mean that central banks worldwide might stop raising interest rates in early 2023.

But the Fed also said it would be prepared to increase rates again should risks emerge "that could impede the attainment of the Committee's goals." 

A US government report showed on Tuesday that inflation in November was slower than initially projected.

November inflation stood at 7.1%, which is down from 7.7% in October and the whopping 9% recorded during the summer.

The Fed had repeatedly signalled it would would slow its interest rate hikes as inflation started to drop toward its targeted level of 2%.