The Federal Reserve lifted its benchmark interest rate by a quarter of a percentage point, the first increase since 2018 and the start of what US central bank officials signalled would be a series of hikes this year with further rises expected at all of the six remaining policy meetings.

At the end of its two-day policy meeting on Wednesday, the Federal Open Market Committee increased the federal funds rate by a quarter of a percentage point, bringing the target range to 0.25 to 0.50 per cent. It is the latest milestone for the US economy in its recovery from the pandemic and the most forceful step to date to combat the highest inflation in four decades.

In a press conference after the meeting, Jay Powell, Fed chair, said the committee had raised rates “against the backdrop of an extremely tight labour market in high inflation” and that it “anticipates that ongoing increases in the target range for the federal funds rate will be appropriate”.