US interest rate rises 0.25%

The Federal Reserve boosted a key short-term interest rate by 0.25% today, its first increase in four years, in an attempt to keep the US economy and inflation on an even keel.

Fed chairman Alan Greenspan and his Federal Open Market Committee colleagues - the group that sets interest rate policy in the United States – increased the federal funds rate to 1.25%.

The funds rate, the Fed’s primary tool for influencing economic activity, had been at 1%, a 46-year low, for a year.