Fed raises fund rate to 1.75%

The US Federal Reserve raised interest rates on Tuesday by a quarter percentage point as expected, the third straight rise in a bid to keep a lid on inflation pressures despite some signs of economic softness.

The unanimous decision by the policy-setting Federal Open Market Committee moves the benchmark federal funds rate — which influences credit costs throughout the economy — to 1.75 per cent. The Fed lifted rates by matching amounts in June and at its last policy session on August 10, spelling an end to a lengthy period of super-low rates.

A soft pace of job creation and higher energy prices have put stress on US consumers, leading to a drop in retail sales in August.

Some economists believe this means the rate-rise cycle is near an end though the Fed has contended an economic ‘‘soft patch’’ that began mid-year will prove short-lived.