WASHINGTON — The Federal Reserve intensified its fight against high inflation on Wednesday, raising its key interest rate by three-quarters of a point – 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 percent. The Fed’s benchmark short-term rate, which affects many consumer and business loans, will now be pegged to a range of 1.5 percent to 1.75 percent –  and Fed policymakers forecast a doubling of that range by year’s end.

Asked why the Fed was announcing a more aggressive rate hike than the half-point increase he had earlier signaled, Fed Chair Jay Powell replied that the latest data had shown inflation to be hotter than anticipated and that the public’s expectation of rising inflation had strengthened.

“We thought strong action was warranted at this meeting,” he said, “and we delivered that.”

The Fed’s three-quarter-point rate increase exceeds the half-point hike that Chair Jerome Powell had previously suggested was likely to be announced this week. Alex Brandon/Associated Press

Powell said that another three-quarter-point hike is possible at the Fed’s next meeting in late July if inflation pressures remain high, although he said such increases would not be common.

The Fed’s decision to impose a rate hike as large as it did Wednesday was an acknowledgment that it’s struggling to curb the pace and persistence of inflation, which is being fueled by a strong labor market, pandemic-related supply disruptions and soaring energy prices that have been aggravated by Russia’s invasion of Ukraine.

Powell said he believes the economy is strong enough to endure higher rates without tipping into recession, a prospect that many economists are increasingly worried about.

Some analysts said they welcomed the Fed’s more aggressive posture. “The more the Fed does now, the less they will have to later,’’ said Thomas Garretson, senior portfolio strategist at RCB Wealth Management.

Inflation has shot to the top of voter concerns in the months before Congress’ midterm elections, souring the public’s view of the economy, weakening President Joe Biden’s approval ratings and raising the likelihood of Democratic losses in November. Biden has sought to show he recognizes the pain that inflation is causing American households 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 Fed.

Yet the Fed’s rate hikes are blunt tools for trying to lower inflation while also sustaining growth. Shortages of oil, gasoline and food are escalating prices. The Fed isn’t ideally suited to address many of the roots of inflation, which involve Russia’s invasion of Ukraine, still-clogged global supply chains, labor shortages and surging demand for services from airline tickets to restaurant meals.

At his news conference, Powell struck a defensive note when asked whether the Fed was now prepared to accept a recession as the price of curbing inflation and bringing it close to the Fed 2 percent target level.

“We’re not trying to induce a recession now,” he said. “Let’s be clear about that. We’re trying to achieve 2 percent inflation.”

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 percent, its highest level since before the 2008 financial crisis, up from just 3 percent at the start of the year. The yield on the 2-year Treasury note, a benchmark for corporate borrowing, has jumped to 3.3 percent, its highest level since 2007.

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.

In their updated forecasts Wednesday, the Fed’s policymakers indicated that after this year’s rate increases, they foresee two more rate hikes by the end of 2023, at which point they expect inflation to finally fall below 3 percent, close to their target level. But they expect inflation to still be 5.2 percent at the end of this year, much higher than they’d estimated in March.

Over the next two years, the officials are forecasting a much weaker economy than was envisioned in March. They expect the unemployment rate to reach 3.7 percent by year’s end and 3.9 percent by the end of 2023. Those are only slight increases from the current 3.6 percent jobless rate. But they mark the first time since it began raising rates that the Fed has acknowledged that its actions will weaken the economy.

The central bank has also sharply lowered its projections for economic growth, to 1.7 percent this year and next. That’s below its outlook in March but better than some economists’ expectation for a recession next year.

Investments around the world, from bonds to bitcoin, have tumbled on fears surrounding inflation and the prospect that the Fed’s aggressive drive to control it will cause a recession. Even if the Fed manages the delicate trick of curbing inflation without causing a downturn, higher rates will nevertheless inflict pressure on stocks. The S&P 500 has already sunk more than 20 percent this year, meeting the definition of a bear market.

On Wednesday, the S&P 500 was rose 1.5 percent. The two-year Treasury yield fell to 3.26 percent from 3.45 percent late Tuesday, with the biggest move happening after Powell said not to expect 0.75 percentage point rate hikes to be common.

Other central banks are also acting swiftly to try to quell inflation, even with their nations at greater risk of recession than the U.S. The European Central Bank is expected to raise rates by a quarter-point in July, its first increase in 11 years. It could announce a larger hike in September if record-high levels of inflation persist. On Wednesday, the ECB vowed to create a market backstop that could buffer member countries against financial turmoil of the kind that erupted during a debt crisis more than a decade ago.

The Bank of England has raised rates four times since December to a 13-year high, despite predictions that economic growth will be unchanged in the second quarter. The BOE will hold an interest rate meeting on Thursday.

Last week, the World Bank warned of the threat of “stagflation” – slow growth accompanied by high inflation – around the world.