The rate has been increased by 0.25 percentage points in an effort to further bring down inflation and said the full effect of previous raises has yet to be felt.

As a result, it will continue to assess the effect of rate rises, examining the impact on the economy, to determine if more rises are needed.

The Fed had decided to hold interest rates last month, after 10 consecutive rises, as inflation fell in May to its slowest pace in more than two years.

Thursday's rise comes despite the rate of price rises dropping further - to 3% in the year up to May - as the Fed seeks to bring inflation down to its 2% target.

The UK inflation figure is more than double the US rate, which official figures show stood at 7.9% in the year up to June.

Following the Fed's announcement, US interest rates stand at 5.25% to 5.5%, a high not previously seen for 22 years and up from 5% to 5.25% before the announcement.

In the US, the interest rate is a range, rather than a single percentage - unlike the UK - because the Fed does not set a specific figure. Instead, the figures are a target rate to guide lenders.