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Published: Jun 15, 2022 5 min read
Photo illustration depicting Jerome Powell, chair of the Federal Reserve
Money; Getty Images

The Federal Reserve took its fight against inflation to a new level on Wednesday, announcing that it's raising interest rates by 0.75% — the largest increase the central bank has enacted since 1994.

The target for the federal funds rate, or the rate at which banks lend each other money, is now 1.5% to 1.75%. Although an increase of that size was in line with predictions, it's up from the 0.75%-to-1% range set by the Fed this past May. It also represents a significant shift from the Fed's approach during the height of the pandemic, which was to keep rates near zero in hopes of spurring economic activity.

While that may sound like a bunch of jargon, Fed rate hikes can actually have a meaningful impact on the wallets of everyday Americans, especially amid concerns about rising prices and the possibility of a recession.

Here's what you need to know.