US raises interest rates as Greenspan retires

The US Federal Reserve today nudged a key interest rate up to the highest level in nearly five years as Alan Greenspan brought his long tenure as chairman of the US central bank to a close.

At Greenspan’s final meeting, the central bank voted to boost its target for the federal funds rate to 4.5%.

It was the 14th quarter-point move in a credit-tightening campaign that began 19 months ago.

The increase will raise borrowing costs for millions of American consumers and businesses as banks were expected to quickly boost their prime lending rates by a similar quarter-point.

The prime rate stood at 7.25% before today’s Fed meeting.