The Fed began its two-day meeting on Tuesday, but did not announce the interest rate announcement until Wednesday evening, Swedish time.
After the meeting, the central bank signaled that they were planning interest rate increases as early as March.
During the pandemic, the central bank pursued a low-interest rate policy to stimulate the economy and drive employment and growth.
As a result, inflation has soared.
The prevailing inflation in the United States has caused prices to skyrocket.
During December, the US consumer price index rose by seven percent, the highest since 1982.
By changing the Fed's fund interest rate as it is called, the Fed can change the cost of borrowing in the economy, which in turn affects the demand for goods and services in general.
Raising the cost of credit through the fund interest rate dampens demand and helps reduce inflationary pressures in the short term.
The Fed also announced that it will phase out purchases of government bonds in March to tackle rising inflation.