NEW YORK (PIX11)– The Federal Reserve raised the interest rate by three-quarters of a point in an effort to slow down rising inflation costs.

The move raised the cost of borrowing money, but the hike will eventually stabilize the cost of basic needs, like gas, food, and clothing. Credit card loans, car loans, and mortgage loans, however, will be more expensive.

The increase is the largest bump since 1994 — and signaling more rate hikes ahead as it tries to cool off the U.S. economy without causing a recession.

The unusually large rate hike came after data released Friday showed U.S. inflation rose last month to a four-decade high of 8.6% — a surprise jump that made financial markets uneasy about how the Fed would respond. The Fed’s benchmark short-term rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75% — and Fed policymakers forecast a doubling of that range by year’s end.

“We thought strong action was warranted at this meeting, and we delivered that,” Fed Chair Jerome Powell said at a news conference in which he stressed the central bank’s commitment to do what it takes to bring inflation down to the Fed’s target rate of 2%. Getting to that point, he said, might result in a slightly higher unemployment rate as economic growth slows.

–Associated Press material was used in this report.