The US Federal Reserve raised its benchmark interest rate by 25 basis points Wednesday, delivering its first rate hike in more than three years as inflation remained elevated.
The Federal Open Market Committee (FOMC) increased the target range for the federal funds rate to 3.75%-4% in support of the central bank's dual mandate of maximum employment and price stability.
The decision was approved unanimously in a 12-0 vote.
"Inflation remains elevated," the Fed said, adding that the policy action would support a "timelier return" to its 2% inflation target.
"The Committee will deliver price stability," it added.
The latest official data showed US consumer inflation remained well above the central bank's target in August.
The Consumer Price Index (CPI) rose 0.4% month on month in August, accelerating from a 0.1% increase in July, according to the Bureau of Labor Statistics.
Annual inflation stood at 3.4%, unchanged from July.
Core inflation, which excludes volatile food and energy prices, eased to 2.4% annually from 2.5%, despite accelerating to 0.3% on a monthly basis.
Energy prices jumped 16.3% from a year earlier, including a 27.4% surge in gasoline prices.
The Fed said economic activity continued to expand at a solid pace, while domestic spending remained resilient despite uncertainty that remained elevated partly because of geopolitical developments.
Productivity growth was strong and capital investment remained robust, according to the statement.
The central bank also said job gains had kept pace with growth in the workforce and that the unemployment rate had changed little.
The FOMC said it would continue its policy of maintaining ample reserves in the banking system.
