The US Federal Reserve hiked interest rates 0.75% on Wednesday, hitting a target range between 2.25% to 2.5% in a bid to tackle soaring inflation.
US inflation reached a record height of 9.1% in June this year, ahead of analyst expectations and sparking renewed fears of a recession.
Meanwhile, some market analysts expect the US to announce its second quarterly economic contraction this week.
Federal Reserve chairman Jerome Powell highlighted the institution would potentially confirm another large interest rates rise at its next meeting if inflation showed insufficient evidence of slowing down.
“While another unusually large increase could be appropriate at our next meeting, that is a decision that will depend on the data we get between now and then,” said Federal Reserve chair Jerome Powell.
“My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation.”
“We are highly attentive to the risks high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our 2 percent objective.”
Consumer confidence has spiralled in recent months as the war in Ukraine and the aftermath of the Covid-19 pandemic cripple supply chains place resources such as wheat and oil under pressure.
“Although prices for some commodities have turned down recently, the earlier surge in prices of crude oil and other commodities that resulted from Russia’s war on Ukraine has boosted prices for gasoline and food, creating additional upward pressure on inflation,” said Powell.