The Federal Reserve on Wednesday raised the benchmark lending rate by a half percentage point in its ongoing effort to contain the highest inflation in four decades.

After a quarter-point increase in March, the US central bank's policy-setting Federal Open Market Committee (FOMC) pushed the rate above 0.75 percent as it continues tightening policy to cool the economy, and said more increases "will be appropriate."

Policymakers continue to believe inflation will gradually return to the Fed's two-percent target as it raises borrowing costs, but will be "highly attentive to inflation risks," the FOMC said in a statement following the conclusion of its two-day meeting.

The committee also noted the "highly uncertain" impact of external factors including Russia's assault on Ukraine, which are "creating additional upward pressure on inflation and are likely to weigh on economic activity."

In addition, Covid lockdowns in China "are likely to exacerbate supply chain disruptions," the statement said.

The FOMC also said it would begin reducing its massive bond holdings starting June 1, beginning at the pace of US$47.5 billion a month, and then doubling after three months. (AFP)