The US central bank has announced another unusually large interest rate hike as it battles to rein in soaring prices in the world’s largest economy.

The Federal Reserve said it would increase its key rate by 0.75 percentage points, targeting a range of 2.25% to 2.5%.

The bank has been raising borrowing costs since March to try to cool the economy and ease price inflation.

But fears are rising the moves will tip the US into recession.

Recent reports have shown falling consumer confidence, a slowing housing market, jobless claims rising and the first contraction in business activity since 2020.

Many expect official figures this week will show the US economy shrank for the second quarter in a row.

In many countries, that milestone is considered a recession though it is measured differently in the US.

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At a press conference, Federal Reserve Chairman Jerome Powell acknowledged that parts of the economy were slowing, but said the bank was likely to keep raising interest rates in the months ahead despite the risks, pointing to inflation that is running at a 40-year high.

“Nothing works in the economy without price stability,” he said. “We need to see inflation coming down…That’s not something we can avoid doing.”