The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday and Fed Chair Jerome Powell said the economy still needed to slow and the labor market to weaken for inflation to "credibly" return to the U.S. central bank's 2% target.

The hike, the Fed's 11th in its last 12 meetings, set the benchmark overnight interest rate in the 5.25%-5.50% range, a level last seen just prior to the 2007 housing market crash and which has not been consistently exceeded for about 22 years.

"The (Federal Open Market) Committee will continue to assess additional information and its implications for monetary policy," the Fed said in language that was little changed from its June 14 statement and which left the central bank's policy options open as it searches for a stopping point to the current tightening cycle.

Powell made no promises either way, with a September meeting eight weeks from now considered "live" for another rate increase, though a continued slowing of inflation and weaker economic data may also prompt policymakers to pause.

In a press conference following the Fed's latest policy move, the Fed chief said the central bank was very much looking at "the totality" of incoming data, and particularly studying it for signs that the economy is heading for a period of "below-trend" growth that Powell thinks is necessary for inflation to fall.

Key price measures are still increasing at more than double the Fed's target. While inflation has been easing, that has so far happened with little apparent cost to the labor market, where the unemployment rate remains at a low 3.6%. Economic growth has remained above the Fed's estimated 1.8% trend rate; economists polled by Reuters expect data on Thursday will show second-quarter gross domestic product expanded at just that level.