The US central bank has stepped up the pace of tightening with its third increase in short-term interest rates since the 2008 crisis as policymakers grow increasingly confident that America’s enduring recovery will lift inflation.

The Federal Reserve raised the target range for the federal funds rate to 0.75 per cent to 1 per cent, in a move that has come earlier than markets were expecting as recently as last month.

Fed policymakers stuck with previous median projections that there will be a total of three increases in rates this year, defying predictions from some bullish analysts that it would release a more aggressive set of rate-raising forecasts. One rate-setter — Neel Kashkari of the Minneapolis Fed — dissented from the vote for a rise, arguing in favour of unchanged rates.

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