The US Federal Reserve last night raised interest rates to the highest level in more than five years.
The move is a blow to West Midlands exporters for whom the US is a critical market.
And, although the Fed signalled that it may now take a pause to assess the impact of its string of rate hikes, it said it may need to raise rates further to keep inflation risks down in its nearly two-year credit-tightening campaign.
As widely expected, the bank's policy-setting Federal Open Market Committee voted unanimously to raise the benchmark federal funds rate a quarter per cent to five per cent, its highest level since April 2001.
The FOMC - meeting for only the second time under new chairman Ben Bernanke - said in a statement that yet more policy firming may be needed.
The "extent and timing" of such rate increases would depend on future economic data.
Private economists are split over whether the rate hike will be the last or whether the Fed may pause for one or two meetings and then raise rates once or twice more to make sure that a recent jump in energy prices does not spill over into more widespread inflation problems - just the sort of question the Bank of England Monetary Policy Committee is wrestling with.
The overall economy grew at a sizzling pace of 4.8 per cent in the first three months of this year, the fastest spurt for gross domestic product in two-and-a-half years. But private forecasters believe growth has slowed in the current quarter, reflecting in part rising mortgage rates, which have dampened home sales.
The Fed statement said that while economic growth had been "quite strong so far this year", the central bank still expected it would moderate to a more sustainable pace, "partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices".
The surge in energy prices so far had had "only a modest effect on core inflation". Expectations remain contained.
