For the first time in 22 years, the U.S. Federal Reserve is raising interest rates by half a percentage point.
That's what we're breaking down first today. I'm Carl Azuz.
Interest is what banks get paid for loaning people money.
If the Federal Reserve, America's central bank raises interest rates, it means people have to pay back a higher percentage of the money they borrow.
Why would the Fed want to do that? Inflation.
The cost of living in America has gone up significantly over the past year as prices on the things we buy have risen.
The thinking goes that if interest rates are higher and it's more expensive for people and businesses to borrow money, they'll spend less of it and inflation will settle back down.
It's not an exact science.
If the Fed raises interest rates too much too quickly, it can be like slamming the brakes on economic growth and that could contribute to a recession.
So, the central bank is trying to find a balance between managing decades-high inflation but without hampering economic growth.
That's what's behind its decision on Wednesday to raise interest rates.
Half a percentage point doesn't sound like much, but the Fed usually makes smaller adjustments like the quarter-point rate hike it issued in March.
The last time the Fed raised the rate by half a point was in 2000, and it says more raises like this are possible in the months ahead.
The Fed says the U.S. labor market, the jobs picture, is strong.
But consumer prices have risen at their highest rate in almost four decades and the Fed doesn't think inflation's likely to go away on its own anytime soon.
It says the war in Ukraine is contributing to elevated food and energy prices and those had risen last year before Russia invaded.
With all these economic pressures in place, the Fed is hoping its interest rate increases will slow down price increases.
New data on inflation itself is also expected soon.