The Federal Reserve announced Wednesday that it will be raising interest rates by 0.75 percentage points in an effort to tame inflation. This is the fourth rate hike of the year and the Fed has acknowledged that economic conditions appear to be “softening.”

After concluding a two-day meeting of the Federal Open Market Committee (FOMC), the Fed released a policy statement that announced the rate hike. Much of the language appeared to mirror last month’s statement explaining its decision, but this time the Fed offered a sign that it may see its hawkish strategy beginning to pay off.

“Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months,” the statement reads.

Markets and observers suspected that the Fed would likely raise rates at their most recent meeting, particularly after inflation readings for June showed that inflation remained very much intact. According to government data, the Consumer Price Index (CPI) had risen 9.1% while the Producer Price Index (PPI) shot up to 11.3%.

Through raising rates at the same level as last month’s increase, the Fed also displayed some signs of caution. Business leaders have openly cautioned that they saw the economy as poised for a recession as interest rates and inflation continued to climb higher. Democratic senators have also voiced their concern that the Fed may stumble into a recession in its bid to reduce inflation.

In Senate testimony in June, Fed Chair Jerome Powell acknowledged the possibility that the economy risked entering a recession existed, but that it was not a foregone conclusion. Powell also flatly denied the Fed was seeking to induce a recession as part of its inflation-fighting strategy.

Dan North, a senior economist at trade credit insurer Allianz Trade North America, said that it would be impossible for the Fed to ignore the “relentless pace of inflation” after June’s readings. He noted that the Fed’s hawkishness carries real recessionary risks for the economy at large.

"The Fed is really slamming the brakes hard on the economy, raising the risk of recession," North told International Business Times in an email.

North pointed to the impact of rate hikes on the housing market to illustrate an example of how rate increases carried its own costs. Mortgage rates have climbed in the wake of the Fed’s choice in March to start hiking interest rates, driving down applications. The Mortgage Bankers Association reported on Wednesday that applications for refinancing fell by 83% on a year-by-year basis ahead of the Fed’s decision.

"The Fed is really slamming the brakes hard on the economy, raising the risk of recession," said North. "The Fed has to raise rates to fight inflation, but it’s an ugly scenario."

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