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Fed hikes interest rates again, up 0.75 percentage points

An interest rate hike will affect anyone with a home mortgage, car loan, savings account or money in the stock market. (Video: Daron Taylor/The Washington Post)

The Federal Reserve on Wednesday hiked interest rates by 0.75 percentage points for the fourth time in a row as central bankers keep up their fight against inflation, despite rising concern about the risks of a recession next year.

“In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” bank officials said in a statement released at the end of the Fed’s two-day policy meeting.

The rate hike was expected, since officials have shown no signs of backing down from their most aggressive rate hike campaign in decades. The Fed has now raised rates six times this year, pushing its federal funds rate to between 3.75 and 4 percent — considered “restrictive” territory that should slow economic growth. Now the question becomes when and how officials will decide to ease, or even pause, their campaign, especially amid rising concerns that they may overcorrect or outrun their ability to see whether their policies are working.The Fed’s own projections show a possible hike of half a percentage point at the next meeting in December, followed by a smaller hike in early 2023.

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