The Federal Reserve on Wednesday said it was raising interest rates by a half percentage point to curb high inflation.

Why it matters: This is the first time in 22 years when the rate of interest increased this much, according to CNN.

What they’re saying: “Inflation is much too high and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down. We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses,” Fed Chairman Jerome Powell said during a news conference.

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Details: He also said that more half-point percentage raises, though nothing higher, can be anticipated this year, while the Fed shrinks its $9 trillion balance sheet of assets.

  • Powell went on to say that the impact of the Russian invasion of Ukraine has created an “additional upward pressure on inflation” as the price of crude oil and other commodities skyrockets. Meanwhile, COVID-19 lockdowns in China are likely going to make supply chain problems worse.

Flashback: The last time the Fed raised rates by a half point was in 2000, per The Wall Street Journal.

What else? According to CNBC News, these interest rates become the standard that banks follow to charge each other for short-term lending. It also affects adjustable-rate consumer debt, like mortgages.

Between the lines: The recent inflation left Wall Street worried. If it isn’t controlled, the Fed can announce a recession to slow things down. Goldman Sachs said last month that there is a 35% chance of a recession in the U.S. within the next two years, as reported by the Deseret News.