By CHRISTOPHER RUGABER

WASHINGTON (AP) — The Federal Reserve on Wednesday raised its benchmark interest rate by a hefty three-quarters of a point for a second straight time in its most aggressive drive in three decades to tame high inflation.

The Fed’s move will raise its key rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018.

The central bank’s decision follows a jump in inflation to 9.1%, the fastest annual rate in 41 years, and reflects its strenuous efforts to slow price gains across the economy. By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.

The Fed is tightening credit even while the economy has begun to slow, thereby heightening the risk that its rate hikes will cause a recession later this year or next. The surge in inflation and fear of a recession have eroded consumer confidence and stirred public anxiety about the economy, which is sending frustratingly mixed signals.

With the November midterm elections nearing, Americans’ discontent has diminished President Joe Biden’s public approval ratings and increased the likelihood that the Democrats will lose control of the House and Senate.

The Fed’s moves to sharply tighten credit have torpedoed the housing market, which is especially sensitive to interest rate changes. The average rate on a 30-year fixed mortgage has roughly doubled in the past year, to 5.5%, and home sales have tumbled.

At the same time, consumers are showing signs of cutting spending in the face of high prices. And business surveys suggest that sales are slowing.

The central bank is betting that it can slow growth just enough to tame inflation yet not so much as to trigger a recession — a risk that many analysts fear may end badly.

On Thursday, when the government estimates the gross domestic product for the April-June period, some economists think it may show that the economy shrank for a second straight quarter. That would meet one longstanding assumption for when a recession has begun.

But economists say that wouldn’t necessarily mean a recession had started. During those same six months when the overall economy might have contracted, employers added 2.7 million jobs — more than in most entire years before the pandemic. Wages are also rising at a healthy pace, with many employers still struggling to attract and retain enough workers.

Still, slowing growth puts the Fed’s policymakers in a high-risk quandary: How high should they raise borrowing rates if the economy is decelerating? Weaker growth, if it causes layoffs and raises unemployment, often reduces inflation on its own.

That dilemma could become an even more consequential one for the Fed next year, when the economy may be in worse shape and inflation will likely still exceed the central bank’s 2% target.

“How much recession risk are you willing to bear to get (inflation) back to 2%, quickly, versus over the course of several years?” asked Nathan Sheets, a former Fed economist who is global chief economist at Citi. “Those are the kinds of issues they’re going to have to wrestle with.”

Economists at Bank of America foresee a “mild” recession later this year. Goldman Sachs analysts estimate a 50-50 likelihood of a recession within two years.

Among analysts who foresee a recession, most predict that it will prove relatively mild. The unemployment rate, they note, is near a 50-year low, and households are overall in solid financial shape, with more cash and smaller debts than after the housing bubble burst in 2008.

Fed officials have suggested that at its new level, their key short-term rate will neither stimulate growth nor restrict it – what they call a “neutral” level. Chair Jerome Powell has said the Fed wants its key rate to reach neutral relatively quickly.

Should the economy continue to show signs of slowing, the Fed may moderate the size of its rate hikes as soon as its next meeting in September, perhaps to a half-point. Such an increase, followed by possibly quarter-point hikes in November and December, would still raise the Fed’s short-term rate to 3.25% to 3.5% by year’s end — the highest point since 2008.

By TOM DAVIES and ARLEIGH RODGERS

INDIANAPOLIS (AP) — Thousands of people arguing the abortion issue surrounded the Indiana Statehouse and filled its corridors Monday as state lawmakers began consideration of a Republican proposal to ban nearly all abortions in the state and Vice President Kamala Harris denounced the effort during a meeting with Democratic legislators.

Harris said during a trip to Indianapolis that the abortion ban proposal reflects a health care crisis in the country. Despite the bill’s abortion ban language, anti-abortion activists lined up before a legislative committee to argue that the bill wasn’t strict enough and lacked enforcement teeth.

Indiana is one of the first Republican-run state legislatures to debate tighter abortion laws following the U.S. Supreme Court decision last month overturning Roe v. Wade. The Supreme Court ruling is expected to lead to abortion bans in roughly half the states.

“Maybe some people need to actually learn how a woman’s body works,” Harris said Monday, eliciting murmurs and laughs from the Democratic legislators. “The parameters that are being proposed mean that for the vast majority of women, by the time she realizes she is pregnant, she will effectively be prohibited from having access to reproductive health care that will allow her to choose what happens to her body.”

Confrontations erupted periodically between anti-abortion and abortion-rights demonstrators around the Indiana Statehouse. One person carrying a message on cardboard — “Forced Birth Is Violence” — followed a man, who carried a fake red fetus in a plastic bag over his shoulder, and tried to obscure his sign that read “Save Our Babies.”

Some people had virulent arguments encircled by other demonstrators

“You think you should dictate my life and my kids’ lives. That’s what you’re saying,” Kait Schultz, who wore a dark gray “Pregnant and Pissed” shirt, shouted to Christopher Monaghan.

“You don’t want to have a conversation,” Monaghan replied as they spoke over each other. He held a vertical sign that read “Babies Lives Matter.”

Elsewhere Monday, Lawmakers in West Virginia’s Republican majority hurried to advance legislation that would criminalize abortion with few exceptions. A bill introduced Monday makes providing an abortion a felony carrying up to 10 years in prison. It provides exceptions only in cases where there is an ectopic pregnancy, a “nonmedically viable fetus” or a medical emergency.

West Virginia Gov. Jim Justice abruptly added state abortion law to the state’s Legislature’s agenda for a special session he called for Monday to focus on his income tax cut plan.

In his announcement, Justice asked legislators to “clarify and modernize” the state abortion laws in the wake of the Supreme Court ruling. A week ago, a Charleston judge blocked enforcement of the state’s 150-year-old abortion ban, saying the recent laws enacted by the West Virginia Legislature “hopelessly conflict with the criminal abortion ban.”

In Tennessee, meanwhile, the attorney general’s office said it’s still unknown when the state’s anti-abortion “trigger ban” will go into effect, but some state lawmakers are raising alarm that the ban has no exceptions for victims of rape or incest.

Tennessee has been limiting abortion as early as six weeks into pregnancy — when most women don’t know they’re pregnant — ever since the U.S. Supreme Court’s abortion decision last month. Republican Gov. Bill Lee refused last week to answer questions from reporters on he supported tweaking the trigger law, particularly sidestepping on whether he supported exempting children who were raped and then became pregnant.

In Wyoming, a lawsuit filed Monday by a Casper women’s health clinic and others seeks to block the state’s new abortion ban just before it’s scheduled to take effect. The lawsuit claims the new law violates the state constitution with restrictions that will discourage potentially lifesaving pregnancy healthcare in Wyoming, forcing pregnant women to go to other states for necessary procedures.

Indiana’s Republican Senate leaders proposed a bill last week that would prohibit abortions from the time an egg is implanted in a woman’s uterus with limited exceptions — in cases of rape, incest and to protect the life of the mother. The proposal followed the political firestorm over a 10-year-old rape victim who traveled to the state from neighboring Ohio to end her pregnancy.

“She is a baby,” Democratic Rep. Cherrish Pryor of Indianapolis, one of the lawmakers at the meeting with Harris, said of the child. “Why should we force babies to have babies?”

The case of the Ohio girl gained wide attention when an Indianapolis doctor said the child had to go to Indiana because Ohio banned abortions at the first detectable “fetal heartbeat” after the Supreme Court’s abortion decision.

The ultimate fate of the Indiana abortion bill in the Republican-dominated Legislature is uncertain, as leaders of Indiana Right to Life, the state’s most prominent anti-abortion group, are decrying the Senate proposal as weak and lacking enforcement provisions.

Republican Senate leaders said the bill would not add new criminal penalties against doctors involved with abortions, but they would face possibly having their medical licenses revoked for breaking the law.

Numerous anti-abortion activists argued against including the exceptions allowing abortions in cases of rape and incest.

“I don’t believe children should be murdered based on their circumstance of conception,” Emma Duell of Noblesville told the Senate committee. “What happened the night they were conceived, something they have no control over should not affect whether they are protected from abortion violence or not.”

Republican Sen. Sue Glick, the abortion ban bill’s sponsor, said she expected amendments would be considered tightening the exceptions before the Senate’s anticipated vote on the proposal later this week.

Representatives of several physician groups raised concerns about the Indiana proposal possibly being questioned and prosecuted over their medical decisions.

Ariel Ream of Indianapolis said she was undergoing fertility treatments and worried that the abortion ban could leave her health threatened if she were to have a miscarriage and face bleeding.

“When am I hemorrhaging enough to be able to get care?” Ream said. “We don’t know if you go to the ER that doctor’s going to be scared enough to put their license on the line for me.”

___

Arleigh Rodgers is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Arleigh Rodgers on Twitter at https://twitter.com/arleighrodgers

The Associated Press – U.S. markets marched toward gains before the bell Monday ahead of this week’s meeting of the Federal Reserve, which is attempting to tamp down inflation without risking a recession.

Futures for the Dow Jones Industrial Average gained 0.4% and futures for the S&P 500 rose 0.3%.

European shares shifted from losses to gains after Asian markets finished lower and oil prices declined.

On Wednesday, most economists expect the Fed to announce its second 0.75% point increase in its short-term rate in a row, a hefty increase that it hasn’t otherwise implemented since 1994. That will put the Fed’s benchmark rate in a range of 2.25% to 2.5%, the highest level since 2018.

The U.S. economy is slowing, but healthy hiring shows it is not yet in recession, Treasury Secretary Janet Yellen said Sunday on NBC’s “Meet the Press.” She spoke ahead of the release this week of a slew of economic reports that will shed light on an economy currently besieged by rampant inflation as interest rates rise.

The highest-profile report will likely be Thursday, when the Commerce Department will release its first estimate of the economy’s output in the April-June quarter.

“While rising jobless claims, softer home sales, and a buildup in gasoline inventory show the Fed front-loading rate hikes are causing a slowdown and bringing inflation under control, the issue is at what cost,” Stephen Innes of SPI Asset Management said in a commentary.

Some economists forecast it may show a contraction for the second quarter in a row. The economy shrank 1.6% in the January-March quarter. Two straight negative readings is considered an informal definition of a recession, though in this case economists think that’s misleading.

Similar data from Europe have underscored the weakness of the global economy as central banks jack up interest rates. Higher rates make economic conditions more difficult, and too-aggressive hikes could cause a recession.

The DAX in Germany rose 0.3%, the CAC 40 in Paris climbed 0.4% higher while Britain’s FTSE 100 was up 0.2%.

In Asian trading, Tokyo’s Nikkei 225 shed 0.8% to 27,699.25 and the Kospi in Seoul rose 0.4% to 2,403.69.

Hong Kong’s Hang Seng declined 0.2% to 20,562.94, while the Shanghai Composite index gave up 0.6% to 3,250.39.

In Australia, the S&P/ASX 200 edged 1.6 points lower to 6,789.90.

On Friday, the benchmark S&P 500 lost 0.9%, breaking a three-day rally that had carried it to its highest level in six weeks but still gaining 2.5% for the week. The Dow Jones Industrial Average declined 0.4%, while the Nasdaq sank 1.9%.

The 10-year Treasury yield was at 2.82% early Monday. On Friday, it fell to 2.76% from 2.91% late Thursday.

Besides an easing of Treasury yields, falling prices for crude oil in recent weeks has raised hopes that inflation may be peaking. Auto club AAA says on its website as of Monday that the average price of a gallon of regular gas is $4.36 per gallon. That’s down 16 cents per gallon from a week ago, and 55 cents cheaper than one month ago, when the average price was $4.91 per gallon.

Early Monday, U.S. benchmark crude oil was $1.68 higher at $96.38 per barrel in electronic trading on the New York Mercantile Exchange. It gave up $1.65 on Friday to $94.70 per barrel.

Brent crude, the pricing basis for international trading, rose $1.29 to $99.67 per barrel.

The dollar rose to 136.51 Japanese yen from 136.05 yen on Friday. The euro cost $1.0240, up from $1.0214.