The US central bank raises the key interest rate by 0.75 percentage points, which raises it to the highest level since before the financial crisis in 2008. It is the third time in a row that the Fed has announced an interest rate increase of this magnitude.
- My colleagues and I are determined to bring inflation back to our two percent target.
We have both the tools we need and the determination to restore price stability for the sake of American families and businesses, said Federal Reserve Chairman Jerome Powell, at a press conference
After the announcement, the Dow Jones industrial index fell by 0.8 percent and the Nasdaq lost 0.9 percent, before turning upwards after the central bank's press conference.
The dollar strengthens against the krona and the euro.
One dollar now costs SEK 11.08, which is the highest level ever.
On Tuesday, the Swedish Riksbank also announced that the key interest rate will be raised.
The Riksbank decided to increase by 1 percentage point to 1.75 percent, which is the largest increase since the inflation target was introduced in the mid-1990s.
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The American central bank does not go as far in its interest rate hike, but the announcement is considered as expected, something that has already made an impression on the market.
At the end of August, the head of the US central bank, Jerome Powell, gave a speech in which he warned of the austerity that is on the horizon.
He described it as a price you have to pay to bring down inflation.
The Fed also published a "dot plot", something that can be compared to the Riksbank's interest rate path.
It states that the bank's main scenario is that the policy rate will have been raised to 4.4 percent by the end of the year.
The text is updated