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The Federal Reserve raises interest rates by 0.75 percentage points.

The Federal Reserve raised interest rates by three-quarters of a percentage point on Wednesday, its biggest move since 1994, as the central bank ramps up its efforts to tackle the fastest inflation in four decades.

The big rate increase, which markets had expected, has underlined that Fed officials are serious about crushing price increases even if it comes at a cost to the economy.

In a sign of how the Fed expects its policies to affect the economy, officials predicted that the unemployment rate would increase to 3.7 percent this year and to 4.1 percent by 2024, and that growth would slow notably as policymakers push borrowing costs sharply higher and choke off economic demand.

The Fed’s policy rate is now set in a range between 1.50 to 1.75 and policymakers suggested more rate increases to come. The Fed, in a fresh set of economic projections, penciled in interest rates hitting 3.4 percent by the end of 2022. That would be the highest level since 2008 and officials saw their policy rate peaking at 3.8 percent at the end of 2023. Those figures are significantly higher than previous estimates, which showed rates topping out at 2.8 percent next year.

Fed officials also newly indicated that they expected to cut rates in 2024, which could be a sign that they think the economy will weaken so much that they will need to reorient their policy approach. The major takeaway from the Fed’s economic forecasts, which it released for the first time since March, was that officials have become more pessimistic about their chances of letting the economy down gently.

Underlining that, policymakers cut a sentence from their post-meeting statement that had predicted that inflation could moderate while the labor market remained strong — a hint that they believe they may have to slam the brakes on job growth to wrestle inflation under control.

“Inflation remains elevated, reflecting supply-and-demand imbalances related to the pandemic, higher energy prices and broader price pressures,” the Fed reiterated in its post-meeting statement.

One official, the president of the Federal Reserve Bank of Kansas City, Esther George, voted against the rate increase. Though Ms. George has historically worried about high inflation and favored higher interest rates, she would have preferred a half-point move in this instance.

Until late last week, markets and economists broadly expected a half-point move. The Fed had raised rates by a quarter point in March and half a point in May, and had signaled that it expected to continue moving up at that pace in June and July.

But central bankers have received a spate of bad news on inflation in recent days. The Consumer Price Index picked up 8.6 percent in May from a year earlier, the fastest pace of increase since late 1981, as the monthly inflation rate remained brisk even after stripping out food and fuel prices.

While the Fed’s preferred inflation gauge — the Personal Consumption Expenditures measure — is slightly lower, it too remains too hot for comfort. And consumers are beginning to expect faster inflation in the months and even years ahead, based on survey data, which is a worrying development. Economists think that expectations can be self-fulfilling, causing people to ask for wage increases and accept price jumps in ways that perpetuate high inflation.

It is increasingly unlikely that the Fed will be able to rapidly and gently cool inflation to the 2 percent annual rate that it aims for on average and over time.

The central bank has been trying to set the economy onto a more sustainable path without pushing it into a crushing recession that costs jobs and tanks growth. Policymakers have been hoping to raise borrowing costs to tamp down demand just enough to bring supply and demand into balance without inflicting major pain. But as price increases prove stubborn, achieving that so-called soft landing becomes more of a challenge.

The central bank’s interest rate increases are already filtering out to the broader economy, pushing up mortgage rates and helping the housing market begin to cool down. Demand for other consumer goods is showing signs of beginning to slow as money becomes more expensive to borrow, and businesses may cut expansion plans.

The goal is to weigh on demand enough to allow supply — which remains constrained amid global factory shutdowns, shipping issues and labor shortages — to catch up.

But curbing demand without tanking growth is difficult to do, especially because consumption makes up the biggest part of the American economy. If the Fed has to drastically restrain spending in order to bring price increases under control, it could lead to lost jobs and shuttered businesses.

Markets increasingly fear the central bank’s policy will cause a recession. Stock prices have been plummeting and bond market signals are flashing red as Wall Street traders and economists increasingly expect that the economy may tip into a downturn, perhaps next year.

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