WASHINGTON, DC - JANUARY 26: A view of the Marriner S. Eccles Federal Reserve building on January 26, 2022 in Washington, DC. Following a two day meeting, Federal Reserve officials are set to release their January monetary policy decision which economists predict could be an increase in interest rates. (Photo by Anna Moneymaker/Getty Images)

WASHINGTON (AP) — The Federal Reserve intensified its drive to curb the worst inflation in 40 years by raising its benchmark short-term interest rate by an sizable half-percentage point. The half-point hike in the Fed’s key rate — its largest since 2000 — raised it to a range of 0.75% to 1%, the highest point since the pandemic struck two years ago. The Fed will likely follow Wednesday’s move with the fastest pace of hikes in 30 years. The Fed also announced Wednesday that it will start reducing its huge $9 trillion balance sheet, which consists mainly of Treasury and mortgage bonds. Reducing the Fed’s holdings will have the effect of further raising loan costs throughout the economy.

WASHINGTON (AP) — Record-low mortgages below 3% are long gone. Credit card rates will likely rise. So will the cost of an auto loan. Savers may finally receive a yield high enough to top inflation. The half-point hike in its benchmark short-term rate that the Federal Reserve announced Wednesday won’t, by itself, have much immediate effect on most Americans. But additional large hikes are expected to be announced in June and July, and economists foresee the fastest pace of rate increases since 1989. The result could be much higher borrowing costs for households well into the future as the Fed fights the most painfully high inflation in four decades.