US Fed is expected to raise rates

The US Federal Reserve will decide on Tuesday whether to alter interest rates from 3.25%, with analysts forecasting a rise of 25 basis points to 3.5%. It would be the 10th monthly rise in a row by the Fed's Open Market Committee. Analysts expect an increase as the Fed tries to limit inflation amid new job creation and high oil and house prices.

The US economy has grown strongly, with the Commerce Department saying gross domestic product rose at an annual rate of 3.4% in the three months to June. The recent cycle of increases has seen US rates gradually rise from 50-year lows of 1% set in 2002.

Analysts said markets were expecting two or three more rate hikes.

full