This video can not be played

The Federal Reserve has raised US interest rates to 3.75%-4% from 3.5%-3.75%, in a bid to curb inflation. This is the first such increase in three years.

Why has the increase taken place and what does it mean? The BBC’s Samira Hussain explains.

Watch: Why has the Federal Reserve raised interest rates? Video, 00:01:18Watch: Why has the Federal Reserve raised interest rates?

Up Next. CCTV shows last sighting of Noah Woods. Video, 00:00:19CCTV shows last sighting of Noah Woods

Watch: Will Ed Sheeran cancel his tour as support acts quit? Video, 00:01:22Watch: Will Ed Sheeran cancel his tour as support acts quit?

Runaway horse captured by police on motorbikes. Video, 00:00:45Runaway horse captured by police on motorbikes

'Luck and timing': Matthew Rhys on his historic Emmy Awards double win. Video, 00:01:15'Luck and timing': Matthew Rhys on his historic Emmy Awards double win

Warning of space arms race as US confirms weapons in Earth's orbit. Video, 00:01:27Warning of space arms race as US confirms weapons in Earth's orbit

The key findings and recommendations from the Lucy Letby inquiry. Video, 00:01:22The key findings and recommendations from the Lucy Letby inquiry

Mass nesting brings swarms of turtles to Mexican beach. Video, 00:00:30Mass nesting brings swarms of turtles to Mexican beach

Watch: What's behind the decision to review Harry and Meghan's UK security? Video, 00:01:10Watch: What's behind the decision to review Harry and Meghan's UK security?

Superstars and broken records: 2026 Emmy highlights. Video, 00:01:44Superstars and broken records: 2026 Emmy highlights

AI 'more powerful by the day', Anthropic co-founder tells BBC. Video, 00:01:09AI 'more powerful by the day', Anthropic co-founder tells BBC

‘Great’ or ‘alarming’ - Should AI be reined in? Video, 00:01:10‘Great’ or ‘alarming’ - Should AI be reined in?