The Federal Reserve implemented the largest hike to its benchmark interest rate since 1994 on Wednesday as officials frantically seek to tamp down the decades-high inflation hitting household budgets.

The rate-making Federal Open Market Committee announced the hike of 0.75%, or 75 basis points, at the conclusion of their two-day meeting. The hike moved the benchmark short-term rate to a range of 1.5% to 1.75%.

“Job gains have been robust in recent months, and the unemployment rate has remained low,” the FOMC said in a statement. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”

The 0.75% hike was in line with revised expectations after last week’s release of the Consumer Price Index for May. The federal data showed inflation accelerated to a higher-than-expected 8.6% last month, the sharpest rate since December 1981.

Wall Street had long anticipated another half-percentage-point hike – but the mood changed after a report surfaced that economic officials could implement an even larger increase due to alarming inflation data.

While a 0.75% became the consensus view, some, including hedge fund billionaire Bill Ackman, suggested the economy would be better served if the Fed took drastic action by implementing a 1% hike.

Motorists have encountered record-high gas prices across the country over the last month as the national average surpassed an unprecedented $5 per gallon. Other necessities such as groceries and housing have also surged to their highest level in years.

Interest rate hikes make it more expensive for consumers and businesses to borrow money. The Fed is aiming to cool the economy and bring down inflation without tipping the country into a recession.

The benchmark rate can impact credit card rates, savings accounts, some student loans, auto loans and various other factors impacting household budgets.

It can also have indirect effects on mortgages. The 30-year fixed loan mortgage rate hit 6.23% this week after hovering below 3.5% in January – a trend that is having a cooling effect on the housing market.

Volatility on the stock market ahead of the Fed’s decision suggested investors are increasingly skeptical of the Fed’s ability to engineer that “soft landing” for the economy.

The S&P 500 entered bear market territory on Monday and risky assets such as cryptocurrencies and high-growth tech stocks have steadily sold off for months.

Critics have argued the Fed and other policymakers were too slow to react to rising prices before they took hold – with Powell and Treasury Secretary Janet Yellen initially dismissing inflation as “transitory.”

“The idea that there is some Goldilocks outcome in the cards or soft landing is a mockery,” said Danielle DiMartino Booth, CEO and chief strategist at Quill Intelligence. “Consumer sentiment is at record lows and jobless claims have surged since bottoming in mid-March, leaving little doubt that the U.S. has entered recession.”

“The only questions that remain are the length and depth of the current contraction,” she added.

Earlier this week, ex-Treasury Secretary Larry Summers said he disagreed with Yellen’s assertion that the economy would avoid a recession and said a downturn within the next two years as now “more likely than not.”

As The Post reported last week, economists are fearful that actions taken by Powell and President Biden thus far have been insufficient to prevent a recession. Powell and other policymakers have attributed inflation to ongoing supply chain disruptions and the Russian invasion of Ukraine.

Biden has also focused on the Russia-Ukraine war, arguing that Russian President Vladimir Putin is most responsible for record gas prices. Biden’s critics disagree and say his restrictive energy policies have exacerbated the problem.

The Fed has traditionally raised interest rates in quarter-percentage-point increments – with larger hikes reserved for periods of persistent inflation. In May, the central bank hiked rates by a steeper-than-expected half-percentage point for the first time since 2000.

Fed officials seemed to oppose taking more aggressive action as recently as last month. Powell told reporters that half-percentage-point hikes were “on the table” at meetings in June and July – though he said at the time the guidance was contingent on economic conditions.

Powell also said last month that the Fed was not “actively considering” a 0.75% increase.