Washington: The US Federal Reserve on Wednesday decided to raise interest rates by 25 basis points, marking its first increase since July 2023, in a move aimed at curbing persistent inflationary pressures in the US economy.

According to Iraqi News Agency, the US central bank raised the target range for its benchmark interest rate to 3.75%-4.00%. The decision was unanimous at the conclusion of a two-day meeting of the Federal Open Market Committee.

The Federal Reserve stated that the move was aimed at supporting a faster return of inflation to its 2% target. New economic projections indicated that price pressures would persist, with inflation as measured by the personal consumption expenditures index expected to reach 3.7% this year and not return to the 2% level before 2029.

Projections by monetary policymakers showed that 16 of the 18 officials expect at least one further 25-basis-point increase before the end of this year. Estimates indicate that the interest rate range will reach 4.00%-4.25% by the end of 2026.

The rate increase comes as inflation remains above the central bank’s target, alongside higher energy prices and strength in several US economic indicators. Markets had widely expected a quarter-point rate increase.

Following the decision, US stock indexes posted modest gains. The dollar index rose about 0.3%, and the yield on 10-year US Treasury bonds fell by about 4 basis points.