The US Federal Reserve hiked its benchmark overnight interest rate by half a percentage point on Wednesday, the largest increase in 22 years, and announced that it would begin cutting its asset holdings next month as part of its fight against inflation.

In a unanimous decision, the Federal Reserve set its target federal funds rate at 0.75 percent to 1%, implying that further increases in borrowing rates of a similar magnitude are probable.

Despite a dip in GDP in the first three months of the year, the economy is still doing well "Household consumption and fixed investment in businesses are still solid. Job growth has been strong "Following the conclusion of its current two-day policy meeting in Washington, the rate-setting Federal Open Market Committee issued a statement.

The crisis in Ukraine and new coronavirus lockdowns in China are threatening to keep inflation high, according to the report. "The Committee is very concerned about inflation risks."

The Fed's balance sheet, which grew to nearly $9 trillion as the central bank fought to protect the economy from the COVID-19 pandemic, will be allowed to shrink by $47.5 billion per month in June, July, and August, and by up to $95 billion per month in September, according to the statement.

After this week's meeting, policymakers did not offer any new economic projections, but data since their last meeting in March had shown little indication that inflation, wage growth, or the rapid pace of hiring had begun to decrease.

At 2:30 p.m. Fed Chair Jerome Powell will hold a press conference to discuss the policy statement and economic outlook.

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