Federal Reserve approves largest interest rate hike since 1994

The Federal Reserve on Wednesday raised interest rates by three-quarters of a percentage point in a bold bid at taming the historic inflation plaguing the U.S. economy. It's the central bank's biggest move since 1994, The New York Times notes.

Markets expected the rate increase, which suggests "that Fed officials are serious about crushing price increases even if it comes at a cost to the economy," the Times writes. Chair Jerome Powell has remained optimistic the bank can successfully raise rates to tame inflation without triggering a recession — a maneuver known as a "soft landing."

As a result of the hike, the Fed's federal funds rate will now sit between 1.5 percent and 1.75 percent, "pushing up the cost of borrowing for homes, cars and other loans in order to force a slowdown in the economy," CNN writes. One official voted against the increase.

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Economists had prior to this week expected the Fed to embrace a half-point hike, much like the one implemented in May. But a subpar Consumer Price Index report on Friday shifted those predictions toward something much more dramatic.

The bank also shared a mix of good and bad news in its policy statement, CNN notes. The good news? Job growth is up, unemployment is down, and the economy is hot. The bad news? "Inflation remains elevated," and the war in Ukraine is making things worse.