What does the Fed interest rate hike mean for you? Expert weighs in

PHILADELPHIA (WPVI) -- The Federal Reserve instituted a dramatic interest rate hike on Wednesday, the latest in a series of borrowing cost increases, as the central bank tries to dial back near-historic inflation while avoiding an economic downturn.

The Fed raised the benchmark interest rate by 0.75%, repeating the same hike it imposed at each of the last two meetings. Prior to this year, the Fed last matched a hike of this magnitude in 1994.

The move arrives a little more than a week after a higher-than-expected inflation report revealed that prices rose slightly in August, worsening the cost woes for U.S. households and sending the S&P 500 tumbling for its worst day of 2022.

Experts say consumers will continue to feel the pinch.

"It's going to become more difficult to finance purchases. Any purchase on credit, that could be monthly APR on credit cards or mortgage payments, appliances, TVs, refrigerators, etc," said Chris Lafakis, the director at Moody's Analytics.

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"What they want to do is slow down the economy, slow down spending by raising rates," said Bobbi Rebell, a personal finance expert at Talley.

The goal is a soft landing to tame inflation by slowing economic growth without creating a nosedive into a recession, which some have argued we are already in.

But Lafakis says while we aren't there yet, the outlook is bleak.

"It's going to get progressively harder for us to avoid a recession. A recession very well might be in the cards by late 2023 or into 2024. It's going to depend on how much the Federal Reserve has to push," added Lafakis.

As interest rates go up, drivers have been seeing some relief at the pump.

"We've reached 100 days (of declining gas prices) in the Philadelphia five-county area and that translates to more than $1 per gallon after we peaked at $5.11 per gallon," said Jana Tidwell, a spokesperson for AAA.

But that trend appears to be changing nationally. The 98-day streak of declining gas prices came to an end when a gallon of regular went up a penny overnight to $3.68 a gallon.

"This 98-day downward streak is the second longest on record. The longest began in November 2014 and went on for 124 days," said Tidwell.

ABC News contributed to this report.