The US Federal Reserve raised its benchmark short-term interest rate by half a percentage point, its biggest jump since 2000.
"Inflation is way too high. We understand the hardship it is causing, and we're moving expeditiously to bring it back down," said the US central bank chairman Jerome Powell.
"We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses."
Inflation, according to the Fed's preferred gauge, reached 6.6% last month, the highest point in four decades.
It has been accelerated by a combination of robust consumer spending, chronic supply bottlenecks and sharply higher gas and food prices, exacerbated by Russia's war against Ukraine.
The increase in the Fed's key rate raised it to a range of 0.75% to 1%, the highest point since the pandemic struck two years ago. The Federal Reserve also signalled further large rate hikes to come.
The central bank will also reduce its holdings which will further raise loan costs in the US.
They hope that higher borrowing costs will slow spending enough to tame inflation yet not so much as to cause a recession.