The Federal Reserve on Wednesday raised its benchmark interest rate by 50 basis points, slowing its campaign to cool the economy amid early signs that stubbornly high inflation is finally starting to ease.
The widely expected move puts the key benchmark federal funds rate at a range of 4.25% to 4.5%, the highest since 2007, from near-zero in March. It marks the seventh consecutive rate increase this year and puts interest rates in firmly restrictive territory. While the rate hike is slightly smaller than the 75-basis-point increases approved at the past four meetings, it is still large by historical standards.
In addition to the large rate hike, Fed officials laid out an aggressive path of rate increases for next year. New economic projections released after the two-day meeting show policymakers expect rates to rise to 5.1% in 2023, a far higher level than the 4.6% rate officials last projected in September, according to the FOMC's dot plot of individual members' expectations.