WASHINGTON (AP) — On Wednesday morning, the Federal Reserve intensified its drive to tame high inflation by raising its key interest rate by three-quarters of a point. This is the largest hike in nearly three decades. This signals more large rate increases could be coming that would raise the risk of another recession.

The move the Fed announced after its latest policy meeting will raise its benchmark short-term rate, which affects many consumer and business loans, to a range of 1.5% to 1.75%. With the additional rate hikes they foresee, the policymakers expect their key rate to reach a range of 3.25% to 3.5% by year’s end — the highest level since 2008 — meaning that most forms of borrowing will become sharply more expensive.

With inflation having reached a four-decade high of 8.6% and showing no sign of slowing, the central bank is ramping up its drive to tighten credit and attempt to slow growth. Americans are also starting to expect high inflation to last longer than they had before.

This sentiment could embed an inflationary psychology in the economy that would make it harder to bring inflation back to the Fed’s 2% target.

Chair Jerome Powell has previously suggested that a half-point hike would be announced this week, but the actual announced rate of a three-quarter-point has exceeded that expectation. The decision to impose a rate hike as large as this was an acknowledgement that the Federal Reserve is struggling to curb the pace and persistence of inflation, which has only been worsened by Russia’s war against Ukraine and its effects on energy prices.

Borrowing costs have already risen sharply across much of the U.S. economy in response to the Fed’s moves, with the average 30-year fixed mortgage rate topping 6%, its highest level since before the 2008 financial crisis, up from just 3% at the start of the year.

Even if a recession can be avoided, economists say it’s almost inevitable that the Fed will have to inflict some pain — most likely in the form of higher unemployment — as the price of defeating chronically high inflation.

Inflation has been at the top of voter concerns as Congress’ midterms have come closer. The concerns have soured the public’s view of the economy, weakened President Joe Biden’s approval ratings, and raised the likelihood of Democratic losses in November.

Biden has tried to show that he recognizes the pain that inflation has caused, but has struggled to find policy actions that might make a real difference. The president has stressed his belief that the power to curb inflation rests mainly with the Federal Reserve.

Yet rate hikes are not necessarily all that is needed to curb inflation. Shortages of oil, gasoline, and food are propelling inflation and the Federal Reserve isn’t ideally suited to combat those issues and more, including Russia’s invasion of Ukraine, clogged global supply chains, and labor shortages.

Policymakers for the Federal Reserve have indicated that after this year’s rate increases, they foresee two more rate hikes by the end of 2023. That’s when they expect inflation to finally fall below 3%, getting closer to the 2% target. Inflation is still expected to be at 5.2% at the end of this year, much higher than estimated in March.

Overall, the next two years are forecasted to be a much weaker economy than was envisioned in March. Unemployment rate is expected to reach 3.7% by the end of the year and 3.9% by the end of 2023. That’s only a slight increase from the current 3.6% jobless rate, but they mark the first time since it began raising rates that the Federal Reserve has acknowledged that its actions will weaken the economy.

Investments around the world, such as bonds and bitcoin, have taken a tumble based on fears surrounding high inflation and a possible recession.

A key reason why a recession is now likelier is that economists increasingly believe that for the Fed to slow inflation to its 2% target, it will need to sharply reduce consumer spending, wage gains and economic growth. Ultimately, the unemployment rate will almost certainly have to rise — something the Fed hasn’t yet forecast but could in updated economic projections it will issue Wednesday.