US Federal Reserve chairman Jerome Powell has conceded that the world’s largest economy might be heading for a recession, but the need to defeat inflation is so urgent that interest rates will keep going up at the expense of growth and American jobs.

“No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” he admitted on Wednesday (Thursday AEST) after raising the US benchmark rate 0.75 percentage points to 3 per cent to 3.25 per cent. The Fed upgraded its projected peak policy rate to 4.6 per cent in 2023 from 3.8 per cent.