The Federal Reserve approved a rare half-percentage-point interest rate increase—the largest since 2000—and a plan to shrink its $9 trillion asset portfolio as officials kicked into higher gear a campaign to slow inflation, which is running at a 40-year high.

The moves, approved unanimously at the end of a two-day policy meeting Wednesday by the Fed’s rate-setting committee, will raise the central bank’s benchmark federal-funds rate to a target range between 0.75% and 1%.