What will the Fed’s rate hike mean for consumers?

A vehicle drives by the Federal Reserve in Washington last year. The central bank raised interest rates by three-quarters of a percentage point on June 15, its sharpest rate hike since 1994, in an attempt to get inflation under control. (Stefani Reynolds/Bloomberg News)

Inflation has lifted the cost of just about everything, pushing overall prices up 8.6 percent in the past year and leaving many people concerned with what Washington policymakers are doing about it.

The Federal Reserve, the nation’s central bank, is charged with keeping prices stable and with keeping unemployment low. The bank has been moving to tackle the greatest run-up in prices in four decades. But many fear that their efforts to curb inflation have come too late.

This week, as Wall Street teeters and warnings of a potential recession grow, the Fed is under even more intense scrutiny. The central bank announced on Wednesday that it is raising interest rates by three-quarters of a percentage point in an attempt to temper record inflation.

The bank’s aim is that inflation will stabilize over time without slowing economic growth too much and forcing job losses. But less rosy scenarios may materialize, including an economy defined by surging prices and clamped growth. Three years into the pandemic and the unfolding economic turmoil it brought, the Fed is at another crucial turning point. Here’s why: