The Fed delivers biggest interest rate hike in decades to combat surging inflation

The Federal Reserve escalated its battle against inflation Wednesday

announcing the largest interest rate hike in 28 years as the central bank struggles to regain control over soaring consumer prices.

The Fed raised its benchmark interest rate by three-quarters of a percentage point — the biggest hike since 1994

That follows a quarter-point increase in March and a half-point jump in May.

Until a few days ago, most forecasters were expecting another half-point increase in rates this week

in line with the Fed's earlier guidance. But policymakers opted for a more aggressive move

after a report last Friday showed inflation was stronger than expected in May.

Consumer prices were up 8.6% from a year ago

The increase reflects not only rising costs for gasoline and groceries

but also for rent and airfares and a wide range of services.

"The bottom line is, it seems like inflation is becoming more entrenched," said Jay Bryson, chief economist at Wells Fargo.

. "And for many people, I think that was the game-changer."

Fears of a recession grow By sharply raising interest rates, the Fed hopes to tamp down consumer demand, which has overwhelmed supply – driving prices up

Higher rates will make it more expensive to carry a credit card balance, get a car loan or buy a house.