Fed approves interest rate hike, signals one more to come this year

The Federal Reserve on Wednesday approved its first interest rate hike in more than three years and indicated another is to come, as part of an effort aimed at combating inflation brought on by spiraling oil prices and other factors.

In a move that markets widely anticipated , the central bank's Federal Open Market Committee voted 12-0 to increase its key interest rate by a quarter percentage point, or 25 basis points. The move brought the overnight funds rate to a target range of 3.75%-4%.

"Inflation remains elevated," the committee said in its brief post-meeting statement . "Today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability."

During a news conference , Chairman Kevin Warsh said inflation has been "too high ... for too long."

"We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed," he said. "Today, the FOMC decided that this standard has not been satisfied."

Warsh further explained that recent economic reports showed the economy, including the labor market, was strong. However, inflation remained above the central bank's target, and added that tension in the Middle East also contributed to the decision.

"All three of those things lend themselves to a firm unanimous decision today," he said.

Despite a raft of conflicting recent statements from policymakers, markets had priced in a better than 90% chance that the FOMC would approve the increase, though there was chatter about the possibility of multiple dissents.