The Federal Reserve is set to embrace an increasingly aggressive approach to monetary policy tightening as it confronts the highest inflation in four decades.

During its two-day policy meeting, officials on the Federal Open Market Committee have been actively debating the merits of implementing the first 0.75 percentage point increase since 1994. An adjustment of that magnitude would lift its benchmark policy rate to a new target range of 1.50 per cent to 1.75 per cent. Their decision will be announced at 2pm Eastern time on Wednesday.

The discussion marks an abrupt shift for US central bankers, who just before the start of the 12-day “blackout” period ahead of the meeting — during which policymakers are limited in their public communications — indicated broad support for a second consecutive 0.50 percentage point increase, which would have been the first such back-to-back move in nearly 30 years.