The Federal Reserve on Wednesday raised its benchmark interest rate target by three-quarters of a percentage point.

The Federal Open Market Committee, which sets interest rate policy, said its target rate for overnight interbank funding would rise to a range of 2.25 percent to 2.5o percent, up from the 1.50 to 1.75 percent the Fed set last month. In addition, the Fed said it would raise the rate it pays on reserve balances to 2.40 percent.

The Fed took notice in its statement of recent evidence that the economy has slowed.

“Recent indicators of spending and production have softened,” the Fed said. “Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”

The Fed singled out Russia’s invasion of Ukraine as contributing to inflation.

“Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks,” the Fed said.

This is the second consecutive 0.75 point raise, a rate of increases that is unprecedented in the modern era of interest rate targeting. Prior to the 1980s, the Fed targeted the size of the money supply.

The Fed said it would continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a pace of $47.5 billion per month until September, when it anticipates moving up the reduction to $95 billion per month.

The Fed plans to reduce the size of its balance sheet by not replacing bonds as they mature, a process known as allowing the bonds to “roll off.” The Fed currently has a nearly $9 trillion balance sheet thanks to the quantitative easing programs following the financial crisis of 2008 and the bond buying the Fed launched when the pandemic struck. Because the Fed plans to control the pace of the roll-off, rather than just allowing the balance sheet to shrink at whatever pace bonds expire, it will remain a buyer of bonds for the foreseeable future.

Fed officials and staff economists disagree among themselves about the effects of its large-scale asset purchases and the inflation of its balance sheet. Some officials consider the balance sheet reduction to be equivalent to rate increases, another form of monetary tightening.

The Fed hike comes a day before the government is expected to report the rate of growth of the U.S. economy in the second quarter. The median forecast among economists surveyed by the Wall Street Journal is that the economy grew a meager 0.3 percent. A growing minority of analysts, however, think the economy likely contracted in the second quarter. The Atlanta Fed’s GDPNOW real-time tracker on Wednesday sees the economy shrinking 1.2 percent.

The U.S. economy contracted 1.6 percent in the first three months of the year. Two consecutive quarterly contractions is often considered a recession. The National Bureau of Economic Research, a private outfit founded in 1920 that is the semi-official arbiter of recessions, uses a more complex and subjective definition. It says a recession is “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” Often the NBER’s declaration of a recession comes several months after the start of a downturn.

The Biden administration has been insisting that the economy should not be considered to be in a recession even if it shrinks in the second quarter, pointing to the historically low unemployment rate. Critics have said the administration is attempting to redefine recession to avoid being blamed for a serious downturn.

Much of that debate, however, is likely to be moot in the near future. Most economists now think a recession will start next year, with many thinking it will begin in the first half of next year. A few think it may come even earlier. Bank of America says it thinks the economy will be in a recession this year.