The Federal Reserve has hiked interest rates by 25 basis points, marking its first rate hike since July 2023, as it seeks to battle inflation largely caused by rising oil prices.

Today’s announcement puts the overnight funds rate in a range between 3.75%-4%.

“Inflation remains elevated,” the committee, which voted unanimously to raise the rate, said in a statement. “Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”

Higher interest rates make it more expensive for companies and individuals to borrow funds, which in turn, restricts access to cash and constrains their ability to spend, reducing pressure on prices.

Mortgages are also tied to yields for government bonds, and have an affect on housing prices as well.