The US Federal Reserve increased its benchmark interest rate by 50 basis points on Wednesday after the conclusion of its two-day meeting.

The central bank's aggressive move, the steepest rate hike since 2000, carried the benchmark rate to a range of 0.75% to 1%, from its previous level of 0.25% to 0.5%, in order to fight against record-high inflation.

"Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures," the Federal Open Market Committee (FOMC) said in a statement.

Annual consumer inflation in the US rose 8.5% in March, marking the largest 12-month increase since December 1981, according to the US Department of Labor.

On Russia's ongoing war in Ukraine, the Fed said its implications are "highly uncertain" for American economy.

"The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks," the statement said. 

The FOMC added that it has decided to start reducing its asset holdings on the massive $9 trillion balance sheet, which includes holdings of Treasury securities, debt and mortgage-backed securities on June 1.

From June 1 onwards, the Fed will roll off $30 billion of Treasury securities and $17.5 billion mortgage-backed securities./aa