The Federal Open Market Committee (FOMC) has hiked its key interest rates by 75 basis points on Wednesday, to fight soaring inflation.

Fed Chairman Jerome Powell's decision, which was announced at 2 p.m. in Washington, is considered to be the largest back-to-back rate increase in decades. 

"Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures," the Federal Reserve said in its FOMC statement. 

"Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks," it said. 

The annual inflation rate in the US accelerated to 9.1% in June of 2022, the highest since November of 1981, from 8.6% in May and above market forecasts of 8.8%. Investors are looking forward to tomorrow's US GDP numbers, which could give an indication whether the economy has slipped into a recession.

There are ample signs of slowing economic growth and plunging commodity prices that could reduce inflation. However, the FOMC statement did not suggest whether there will be a downshifting to a half-point hike in September.

"The Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals," it said. 

(Writing by Seban Scaria; editing by Daniel Luiz)