WASHINGTON: The Federal Reserve raised its target interest rate by three-quarters of a percentage point on Wednesday to stem a disruptive surge in inflation, and projected a slowing economy and rising unemployment in the months to come.

The rate hike was the biggest announced by the US central bank since 1994, and was delivered after recent data showed little progress in its battle to control a sharp spike in prices.

US central bank officials flagged a faster path of rate hikes to come as well, more closely aligning monetary policy with a rapid shift this week in financial market views of what it will take to bring price pressures under control.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures,” the central bank’s policy-setting Federal Open Market Committee said in a statement at the end of its latest two-day meeting in Washington. “The committee is strongly committed to returning inflation to its 2% objective.”

Fed begins meeting with massive hike possible amid price surge

The statement continued to cite the Ukraine war and China lockdown policies as sources of additional inflation pressures.

The action raised the short-term federal funds rate to a range of 1.50% to 1.75%, and Fed officials at the median projected it would increase to 3.4% by the end of this year and to 3.8% in 2023 - a substantial shift from projections in March that saw the rate rising to 1.9% this year.