The Federal Reserve Wednesday announced its fourth interest rate hike in as many months as the central bank tries to rein in 4-decade high inflation. Following its July meeting, the committee voted to raise the benchmark rate by another 0.75%, identical to the supersized hike in June, which hadn’t been done before that since 1994.

This brings the overnight lending rate banks charge each other to a range of 2.25-2.5%. Until March, that rate had been near zero for two years, at 0.0-0.25%. Raising the federal funds rate has a direct or indirect effect on most other interest rates, from mortgages to credit cards to loans. By making lending more expensive, the Fed hopes to cool economic demand and bring down consumer prices with it.

The Fed is hiking interest rates. Here’s what that means for Americans.

In June, inflation hit a fresh 4-decade peak of 9.1% on an annual basis. Consumer prices rose in nearly every category, with food up 10.4% on the year and gas up nearly 60%. Excluding the more volatile food and energy prices, core consumer prices still rose 5.9% on the year, far above the Fed’s 2% target inflation rate.

When the June figures were released, Wall Street started speculating that the Fed could opt to raise its interest rate by a full percentage point at the July meeting, yet the committee stayed firm at 75 basis points, a figure it hinted at in June.

Still, the current range of 2.25-2.5% is now matching the highest range reached post-Great Recession, in 2019, before the Fed started bringing down rates again amid economic uncertainty.

While the Fed has ambitions to continue raising its target rate more throughout the year, the economy is facing a slowdown that could result in a recession. The Fed is attempting a “soft landing,” where it tightens monetary policy without triggering a recession, but history proves that is difficult to achieve.

Quantitative tightening is ‘uncertain’ Fed method to cool inflation.