Fed raises rates after a pause and leaves door open to more.

Federal Reserve officials raised interest rates to their highest level in 22 years, continuing their 16-month-long campaign to wrestle inflation lower by cooling the American economy.

Officials pushed rates to a range of 5.25 to 5.5 percent, their highest level since 2001, while leaving the door open to further rate increases in the statement announcing their unanimous decision. Jerome H. Powell, the Fed chair, explained the move in a news conference, but offered few hints about how the central bank is thinking about its next steps.

Here’s what to know about the Fed’s latest decision:

• Fed policymakers began to raise rates from near-zero in March 2022 and pushed them up rapidly last year before adjusting them more slowly in 2023, even pausing in June. Because officials think that rates are now high enough to weigh on the economy, they have been moving more gradually to give themselves time to see how growth, the job market and inflation data are responding to the shift in policy. “We’ve covered a lot of ground, and the full effects of our tightening have yet to be felt,” Mr. Powell said during his post-meeting news conference.

• Economists have recently become increasingly hopeful that the Fed might be able to slow inflation without causing an outright downturn, clinching what is often called a soft landing. Inflation has finally begun to subside notably at a time when hiring still remains strong and the unemployment is hovering at very low levels. In a nod to that resilience, officials noted on Wednesday that the economy is expanding at a “moderate” pace, an upgrade from “modest” in their June statement.

• Fed officials may not feel comfortable that inflation will return fully to their 2 percent goal at a time when growth remains so robust. Although the slowdown in inflation so far is welcome news, it has not been driven primarily by their policy changes, but by a slow return to normal after years of pandemic-related disruptions across a range of products, from cars to couches. Mr. Powell said that the process of getting inflation back to 2 percent has “a long way to go.”

• “Inflation repeatedly has proved stronger than we and other forecasters have expected — and at some point that may change,” Mr. Powell said. “We have to be ready to follow the data and given how far we’ve come, we can afford to be a little patient as well as resolute as we let this unfold.”

• The Fed projected in June that it would make two more rate increases this year — the one it ushered in on Wednesday, and then a follow-up at some point in the future. Investors and some economists have speculated that officials may hold off on that second rate move in light of the recent slowdown in inflation. “We haven’t made any decisions about any future meetings,” Mr. Powell said. He avoided explaining what would prompt the Fed to either lift rates or hold them steady at any level of detail, noting that the Fed has time and a substantial amount of data coming before it has to decide on policy again. Policymakers do not need to make another decision on interest rates until Sept. 20.