The US Central Bank has approved another sharp rise in interest rates as it wrestles to rein in fast-rising prices.

The Federal Reserve said it was raising its key interest rate by 0.75 percentage points, lifting it to its highest rate since early 2008.

The bank hopes pushing up borrowing costs will cool the economy and bring down price inflation.

But critics are worried the moves could trigger a serious downturn.

The latest increase takes the bank’s benchmark lending rate to 3.75% – 4%, a range that is the highest since January 2008.

Federal Reserve chairman Jerome Powell warned that rates were likely to move up again, saying that speculation that the bank might pause was “premature”.

“We still have some ways to go,” he said at a press conference following the announcement.

The US’s actions come as many other countries also raise rates in response to their own inflation problems, which have been fuelled by a mixture of factors, including higher energy prices as a result of the war in Ukraine.

In the UK, the Bank of England started raising rates last year but has so far opted for smaller hikes than the Fed. The Bank of England is expected to announce its own 0.75 percentage point hike on Thursday – the biggest such move since 1989.

The sharp rise in borrowing costs has already started to cool some parts of the economy, such as housing.