The Federal Reserve on Wednesday raised its key rate by a hefty three-quarters of a point for third straight time to fight inflation. CNN notes it was a history-making move, and one that puts the central bank's benchmark lending rate in a target range of 3% to 3.25%. That's the highest it has been since 2008. The AP reports policymakers also signaled that by early 2023, they expect to have further raised rates much higher than they had projected in June.
CNBC reports projections from the meeting point to an expected increase of another 1.25 percentage points in the Fed's final two meetings of 2022, bringing things to 4.4%, with another smaller rate hike next year to get to a "terminal rate" of 4.6% in 2023. The AP notes that would be the highest rate since 2007.
Fed officials now see the economy expanding just 0.2% this year, sharply lower than its forecast of 1.7% growth just three months ago. And it expects sluggish growth below 2% from 2023 through 2025. And even with the steep rate hikes the Fed foresees, it still expects core inflation—which excludes the volatile food and gas categories—to be 3.1% at the end of next year, well above its 2% target. The Dow fell around 400 points on the news but soon recovered. (Read more Federal Reserve stories.)