NEW YORK -- The Federal Reserve raised the benchmark interest rate on Wednesday by 75 basis points -- the largest hike since November 1994 -- in its latest move to curb the worst inflation the U.S. has faced in 40 years.

"Overall economic activity appears to have picked up after edging down in the first quarter," the Federal Open Market Committee said in a statement announcing the hike.

Inflation was also pushed up by the pandemic and the war in Ukraine.

"The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions," the statement said.

The 0.75 percentage point increase follows an announcement Friday that the consumer price index rose 8.6% on the year in May, far above market forecasts. The Fed's goal is a sustained inflation rate of 2%.

The rise in the rate that banks charge each other for overnight borrowing is likely to put more downward pressure on Asian currencies, including the yen. The Japanese currency is at its lowest level against the dollar in more than 20 years.

Tightening by the Fed is also expected to increase the debt burdens of developing countries such as Pakistan, which is already struggling with payments, as well as divert capital away from their economies.

Heading into this week the Fed was expected to raise interest rates by 50 basis points as it did following its last meeting in May, but the latest inflation figures may have shifted its thinking before their two-day gathering.

There was one dissenting vote from Esther George, who was in favor of raising the benchmark interest rate by 50 basis points.