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WASHINGTON—The Federal Reserve lifted interest rates by 0.75 percentage point to combat inflation and signaled plans to keep raising them, though possibly in smaller increments.

Fed Approves Fourth 0.75-Point Rate Rise, Hints at Smaller Hikes© Graeme Sloan/Bloomberg News

Fed officials in a Wednesday policy statement acknowledged it could take time for rapid increases this year to be reflected in the economy. “The committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” they said at the conclusion of a two-day meeting.

The statement said continued rate rises were needed “to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.”

Officials are boosting interest rates at the fastest pace since the early 1980s to reduce inflation that is running near a 40-year high. They have raised rates by 0.75 point at four consecutive meetings, with the latest one taking the central bank’s benchmark federal-funds to a range between 3.75% and 4%.

Wall Street analysts are focused on what Fed Chairman Jerome Powell says at a news conference at 2:30 p.m. Eastern time about any deliberations to slow the pace of interest-rate rises at their next meeting in December.

Before June, the central bank hadn’t raised rates by 0.75 point, or 75 basis points, at a policy meeting since 1994. Mr. Powell said after the June meeting he didn’t anticipate such increases to be common and called the move “an unusually large one.”

Officials had expected inflation to decline this year, but in vain so far. They responded by targeting a higher destination for the fed-funds rate than they projected earlier in the year, resulting in the longer-than-anticipated string of 0.75-point rate rises.

(More to Come)