Washington, Sept. 16 (Petra) -- The US Federal Reserve on Wednesday raised interest rates for the first time since 2023 amid persistent inflationary pressures and surging energy costs.

The Federal Open Market Committee (FOMC) unanimously decided to hike the benchmark interest rate by a quarter-percentage point (25 basis points), setting the target range between 3.75 percent and 4 percent, matching market expectations, Bloomberg reported.

The central bank said the committee reached the decision by a 12-0 vote and will maintain ample reserves within the banking system.

"Economic activity has been expanding at a solid pace," the Fed said in a statement. "Despite lingering uncertainty driven in part by geopolitical developments, household spending has shown remarkable resilience, productivity growth remains robust, and capital investment continues to gather momentum. Job gains have been matched by labor force growth, while the unemployment rate has remained largely unchanged." "Inflation remains elevated. Today’s monetary policy action supports a faster return to the Committee’s 2 percent inflation target, as the Committee remains strongly committed to restoring price stability," the statement added.

The decision follows last week's consumer price data, which showed the US Consumer Price Index (CPI) rose 0.4 percent month-on-month in August and 3.4 percent year-on-year, remaining above target levels.

Data showed the energy index rose 2.1 percent in August and 16.3 percent annually, while gasoline prices increased 3.9 percent over the month.

The Fed's turn to rate hikes its first since July 2023 comes as policymakers weigh risks that inflation could become entrenched alongside elevated energy prices driven by geopolitical conflicts.

//Petra// AF