The Federal Reserve has raised its benchmark interest rate by half a percent in an effort to fight inflation. Fed Chairman Jerome Powell made the announcement at a news conference Wednesday morning. Powell said, “Inflation is much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down. We’re strongly committed to restoring price stability.”

In addition to announcing higher interest rates, the federal reserve indicated it would begin reducing asset holdings. Currently, the federal reserve has a $9 trillion balance sheet. The plan to reduce the Federal reserves balance sheet will happen in phases starting in late June.

Powell added, “The American economy is very strong and well-positioned to handle tighter monetary policy.” The news comes as some major banks have warned that a recession could be on the horizon. Earlier this week, Goldman Sachs strategists led by Jan Hatzius said the probability of a recession within the next 24 months is at 38%. Hatzius said, “recession risk has risen. The financial health of the private sector may ultimately determine whether policy tightening will tilt the economy into a downturn.”