The US central bank is poised to raise interest rates as it unwinds the support it has provided the world’s largest economy since the start of the pandemic.

The Federal Reserve did not raise interest rates on Wednesday, but said such a move “will soon be appropriate”.

The bank is under pressure to rein in inflation as prices in the US rise at the fastest rate in almost 40 years.

Analysts expect a rate hike in March, which would be the first since 2018.

At a press conference following Wednesday’s meeting of Fed officials, Federal Reserve chair Jerome Powell did not say how fast or how high US interest rates would rise.

But Mr Powell said officials were “of a mind” to raise the bank’s key rate in March, adding that he was confident the bank could take action without hurting the recovery.

He also suggested that officials are willing to move faster than they did the last time the Fed was raising rates, noting that the economy is “much stronger” than it was in 2015 – as is inflation.

“We’re well aware that this is a different economy than existed during the last tightening cycle,” he said. “Our policy is going to reflect those differences.”

Higher borrowing costs help combat price rises by reducing demand for items such as cars and homes – key drivers of US inflation, which has persisted far longer than Fed officials initially expected.

But the Fed risks chilling economic activity more than intended. Investors in the stock market are also worried about how share prices will respond to the Fed’s moves, as higher interest rates make other investments more attractive.

Jittery markets in the US have seen three consecutive weeks of declines.

The three major US stock indexes pared gains during Mr Powell’s remarks.

Beth Ann Bovino, chief US economist at S&P Global Ratings said, the Fed’s statement confirmed that the bank will rise interest rates in March.

“It’s not just a question of ‘lift off’ in interest rates, it’s now more a question of how high they want to fly their monetary tool – how fast and how many they launch,” she said. “Our reading of their statement suggests that the Fed is aiming for the stars in this cycle of monetary tightening.”