The Federal Reserve raised key US interest rates a quarter-percentage point in a ninth straight increase with no sign of an end to the cycle.
The central bank's policy-setting Federal Open Market Committee unanimously voted to lift the federal funds rate to 3.25 per cent.
The widely expected move brought the benchmark short-term rate to its highest since mid-September 2001. But long-term bond yields remain stubbornly below where they stood when the rate-rise cycle began a year ago, a point that evidently troubles policymakers.
The Fed also said that its policy of removing stimulus at a "measured" pace would remain - an indication that future increases would be quarter-point hikes.
Despite some recent signs of economic softness, partly induced by high energy prices, the Fed's desire to curb inflation looked likely to keep official rates on an upward trajectory for now.
"Pressures on inflation have stayed elevated," the Fed said, even though the rate is expected to remain stable in the long term.
"Although energy prices have risen further, the expansion remains firm and labour market conditions continue to improve gradually," the Fed statement continued.
Stock prices tumbled after the decision, which investors saw as an indicator of higher borrowing costs that will pressure corporate profits. The blue-chip Dow Jones industrial average dropped 99.51 points, or 0.96 percent, to end at 10,274.97.
Bond prices also rose, even though higher interest rates generally depress prices, as investors seemed to focus on the Fed's reassurance that inflation expectations were low.
Analysts were disappointed with Fed plans to press on with rate rises.