The central bank hopes to curb spending, investment and borrowing in order to cool off further price increases.
Battling inflation that remains at four-decade highs, the Federal Reserve said Wednesday it hiked its key interest rate by another 0.75%.
"Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures," the Fed said in its statement Wednesday. It added it is "strongly committed to returning inflation to its 2% objective."
The rate hikes this year have unfolded against the backdrop of a consumer price index that has remained elevated. In September, it clocked in at 8.2% on an annual basis. Food and energy price increases were higher. Even stripped of those two items, whose price swings tend to be more volatile, the index saw its largest increase since 1982.
In a press conference following the release of the central bank's statement, Fed Chairman Jerome Powell said Americans can expect more rate increases, though perhaps not of the same magnitude as the most recent ones.
"There is significant uncertainty around that level of interest rates," he said. "Even so, we still have some ways to go, and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.”
The central bank’s key federal funds rate affects the cost of borrowing and the pace of investment throughout the economy. Since March, the Fed’s rate-hiking has helped make borrowing and investing more expensive, the purpose of which is intended to slow the economy and moderate price increases.