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The US Federal Reserve on Wednesday raised interest rates by half a percentage point, which was less than the three-fourths on previous four occasions, in a sign that it feels these measures are working but the battle against the inflation is not over.

"We have more work to do," Fed Chair Jerome H. Powell, said at a news conference.

This was the seventh rate hike this year by the Fed in an unprecedented set of measures to reign in inflation. These harsh measures, which have the effect of curbing spending which slows down production, had, it was feared, could trigger a recession.

More rate hikes are expected.

"Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures," the Fed said in a statement at the end of a two-day meeting of its top policy body.

"Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are contributing to upward pressure on inflation and are weighing on global economic activity."

The Fed expects inflation to be 5.6 per cent at the end of the year and fall to 3.1 per cent in 2023.

Despite the recent dip in inflation, Powell said "inflation risks are to the upside".