Fed hikes interest rate by 25 basis points to 5.25% amid elevated inflation

Fed Reserve increased the interest rate Wednesday by 25 basis points up to 5.25% while hinting at a rate hike pause in the short term.

A Fed review meeting observed that the economic activity expanded at a modest pace in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low although inflation remains high, said Federal Open Market Committee (FOMC) that reviewed the economy.

Also read: Top Fed official sees need for more interest rate increases 

The U.S. banking system is sound and resilient, an FOMC press release after the meeting said.