US Fed hikes benchmark interest rate by a quarter-point

The US Federal Reserve raised its benchmark lending rate for a tenth consecutive time, while signaling an easing in its forward guidance on signs of an economic slowdown in the United States.

The central bank had embarked on an aggressive campaign of rate hikes since March last year to take aim at price increases, but inflation remains stubbornly above its long-term target of two percent.

The latest quarter-point increase lifts the target lending range to between 5.0 percent and 5.25 percent, the Fed said in a statement, adding that tighter credit conditions for households and businesses are likely to weigh on the economy.

The dollar index fell to a session low of 101.05 and the euro hit a session high of $1.10925 after the Fed's announcement. The dollar also fell to 134.82 against the Japanese yen.

The policy-setting Federal Open Market Committee's (FOMC) latest decision was in line with expectations, and analysts and traders are closely eyeing any shift in the Fed's guidance going forward.

In its statement, the Fed said it will "take into account the cumulative tightening of monetary policy" and lags with which policy impacts the economy, when making future decisions.

This marks a departure from the last rate announcement, in which policymakers said they expected "additional policy firming" could be needed to rein in inflation.

This suggests the Fed is easing its guidance, on signs that the world's biggest economy is cooling.