Washington, Jun 16 (IANS): With the US seeing inflation at historic highs, the Federal Reserve on Wednesday undertook its highest interest rate raise in nearly three decades, by three-quarters of a percentage point.

The Federal Reserve said it would increase its benchmark rate by three quarters of a percentage point, pushing its target range from 1.5 per cent to 1.75 per cent - the highest level since 2019, the BBC reported.

The rise, the third since March, comes after inflation surged unexpectedly last month and the Fed has warned that more rises are likely.

The hike, the largest since 1994, will impact millions of American businesses and households, making loans for homes, cars and other purposes more costly.

Until this week, economists and investors had expected the Fed to raise its benchmark interest rate by half a point. However, after an inflation report last week revealed that price hikes are broadening across the entire economy, it was expected that the rate hike would be more.