The Federal Reserve raised its short-term borrowing rate by 0.75% on Wednesday to slow key areas of the economy and tame inflation, which is at a 40-year high.

The central bank announced a new target range of 3.75%-4%, the highest since January 2008.

The Fed’s aggressive move is the latest in a series of borrowing cost increases imposed in recent months as it attempts to reduce price increases by cooling the economy and choking off demand. The approach, however, risks sending the United States into a recession and displacing millions of people.

The fourth rate increase in 2022 comes less than a week before the midterm elections.

“Russia’s war on Ukraine is causing enormous human and economic suffering. The war and related events are increasing inflationary pressures and weighing on global economic activity. The Committee is particularly concerned about inflationary risks “Fed officials issued a statement. “The Committee anticipates that further increases in the target range will be necessary to achieve a monetary policy stance that is sufficiently restrictive to return inflation to 2% over time.”

Consumer prices rose 0.4% on a seasonally adjusted basis in September, defying efforts to lower prices, according to data released last month. Consumer prices rose 8.2% in the year ending in September, exceeding economists’ expectations.

According to a Bloomberg survey of economists, the Federal Reserve is expected to raise the benchmark interest rate by 0.75%, repeating the hike it imposed at the previous three meetings. Prior to this year, the Fed had not matched a rate increase of this magnitude since 1994.

Federal Reserve Chair Jerome Powell has repeatedly reaffirmed the central bank’s commitment to bringing inflation down to a target rate of 2%, stating that the Fed expects to propose “ongoing increases” to its benchmark interest rate in September.

The personal consumption expenditures price index, the Fed’s preferred inflation measure, is up 5.1% year on year, according to government data released last week.

“Powell has been very clear that inflation is unacceptably high, and we must stay the course to bring it down,” Iowa University economist Anne Villamil told ABC News. “Markets have been hoping for a pause, but I don’t see that happening.”

Despite persistent inflation, evidence suggests that the Fed’s actions have slowed some economic activity.

Mortgage rates reached a 20-year high last week, as the United States continues to experience a slowdown in home sales and construction.

Job growth has remained strong, but it appears to be slowing.

Employers in the United States added 263,000 jobs in September, and the unemployment rate fell slightly to 3.5% from 3.7%, exceeding expectations and demonstrating the labor market’s continued strength.

However, the total was far below the average number of jobs added in a given month in 2022. According to the Department of Labor, monthly job growth has averaged 420,000 so far this year, compared to 562,000 per month in 2021.

Meanwhile, new hires and resignations fell slightly in September, indicating that employers’ demand for labor has begun to wane, according to government data released on Tuesday. However, the number of job openings increased in September, indicating that the demand for workers remains strong.

While some indicators point to a slowing economy, a government report released last month showed significant economic growth over the three months ending in September. The gross domestic product of the United States increased by 2.6% during that time period, while economic activity decreased by 2.2%.

“We’re getting a lot of contradictory signals,” Villamil said. “That is why the Fed has a difficult job.”