The US Federal Reserve as expected raised its key interest rate on Wednesday by a quarter of a percentage point, its first increase since 2018, as it seeks to dampen the worst inflation in 40 years for food, gas and other goods and services.

Policymakers also projected six more similarly sized increases in the months to come.

The increase had been well telegraphed by the Fed, with Chairman Jerome Powell and central bank members hinting at it repeatedly over the past few months. Earlier this month, he told members of Congress that he favored a quarter-point raise in the benchmark federal funds rate.

A surge in consumer spending has helped to push inflation to levels not seen since the 1980s. In the year ended in February, consumer prices rose 7.9 percent, while the prices US producers received for their goods soared 10 percent over the same period.

The rate hikes will eventually make mortgages, credit cards, saving accounts, car loans and corporate debt and borrowing by businesses more expensive, which is expected to slow consumption and eventually slow surging prices.

The Fed directly mentioned the Ukraine-Russia conflict, saying in a statement after announcing its rate increase that the "implications for the US economy are highly uncertain'', adding that in the near term, the conflict and related events "are likely to create additional upward pressure on inflation and weigh on economic activity''.

Powell also said the US economy is very strong, calling recent growth "robust" and the outlook "solid", noting that the labor market is "extremely tight".

The central bank expects inflation to remain elevated, ending 2022 at 4.3 percent, according to updated quarterly projections it released Wednesday, far above the Fed's 2 percent annual target. The officials also now forecast much slower economic growth this year, of 2.8 percent, down from the Fed's 4 percent estimate in December.

"With appropriate firming in the stance of monetary policy, the committee expects inflation to return to its 2 percent objective and the labor market to remain strong," the Fed said in its March statement, noting that the committee "anticipates that ongoing increases in the target range will be appropriate''.

"They knew their policy didn't match the economic backdrop, and this is catch-up," Priya Misra, the head of global rates strategy at TD Securities, told The Wall Street Journal. "They're giving a tough message that they expect they will have to slow growth to bring inflation under control."

The rate-setting Federal Open Market Committee approved the decision by an 8-to-1 vote, with St. Louis Fed President James Bullard dissenting in favor of a larger half-percentage-point increase.

The Fed's decision Wednesday marked a sharp reversal from just two years ago, when it lowered rates to near zero and launched a suite of programs to steady markets and support the economy as COVID-19 shut down large swaths of the economy. The pandemic triggered a severe two-month recession in 2020 and record job losses.

Since then, economic output has recovered amid massive federal stimulus and vaccinations, and inflation surged one year ago.

Stocks closed sharply higher Wednesday after Powell's positive comments on the prospects for economic growth. The Dow Jones Industrial Average finished up 519 points, or 1.6 percent. The S&P 500 closed 2.2 percent higher, while the Nasdaq Composite gained 3.8 percent.