STORY: The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point and laid out a plan to push borrowing costs to restrictive levels by next year.

Fed chair Jerome Powell told reporters that concerns over high inflation and the war in Ukraine will have implications on the U.S. economy.

“At the Federal Reserve, we are strongly committed to achieving the monetary policy goals that Congress has given us: maximum employment and price stability. Today, in support of these goals, the FOMC raised its policy interest rate by one quarter percentage point. The economy is very strong and against the backdrop of an extremely tight labor market and high inflation, the committee anticipates that ongoing increases in the target range for the federal funds rate will be appropriate. In addition, we expect to begin reducing the size of our balance sheet at a coming meeting."

The Fed, in a surprise move, projected the equivalent of quarter-percentage-point rate increases at each of its six remaining policy meetings this year.

"We'll be looking to see whether the data show expected improvement on inflation. We'll be looking at the inflation outlook and making a judgment and we'll be going - each meeting is a live meeting - and if we conclude that it would be appropriate to raise interest rates more quickly, then we'll do so.”

Powell said the U.S. economy is strong and should "flourish" even in an environment where borrowing costs are rising and stimulus is being removed.

"It's clearly time to raise interest rates and begin the balance sheet shrinkage.”

Powell’s statement marked the end of the Fed's full-on battle against the pandemic, as it pledged ongoing increases to curb the highest inflation rates in 40 years.

But even with the tougher rate increases now projected, the Fed expects inflation to stay above its 2% target, remaining at 4.1% through this year and dropping only to 2.3% through 2024.