The Washington PostDemocracy Dies in Darkness

Fed hikes rates by three-quarters of a percentage point to fight inflation

So far, the Federal Reserve has seen few reassurances that its souped-up rate hikes are working, with households feeling the strain of costlier rent, groceries and gas. (Matt McClain/The Washington Post)

Taking aim at stubborn inflation, the Federal Reserve on Wednesday raised interest rates for a fourth time this year to further slow down the economy, arguing that some short-term pain could be the only way to avoid longer-lasting scars.

The Fed hiked interest rates by three-quarters of a percentage point, following a similarly aggressive rate hike in June, even as Chair Jerome H. Powell acknowledged that the Federal Reserve sees previous hikes as already weighing on housing, business investment and consumer demand.

Speaking at a news conference, Powell said he believes the economy is not in a recession. But the paths to avoiding one are narrower than just a few months ago, he added. With inflation remaining at 40-year highs and June prices coming in especially hot, Powell emphasized that controlling inflation is the Fed’s chief priority, even if it brings a slowdown in the job market for now.