Federal Reserve raises interest rates for first time in seven years

Watch this space: interest rates are expected to go up by 0.25 per cent (Getty)

For the first time in nearly a decade, the Federal Reserve has raised interest rates by 0.25 per cent.

All 10 voting members of the Federal Open Market Committee, led by Federal Reserve Chair Janet Yellen, voted in favour of the hike. The decision ends a seven-year period of near-zero rates that followed the 2008 financial crisis.

“This action marks the end of an extraordinary 7-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression,” Ms Yellen said.

“With the economy performing well, and expected to continue to do so, the committee judged that a modest increase in the federal funds rate target is now appropriate, recognizing that even after this increase, monetary policy remains accommodative.”

"The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run," the Fed said in a statement on Wednesday. "However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The DOW is up nearly 150 points following the announcement, according to the New York Times.