Federal Reserve hikes key interest rate 0.75 percentage point, projects economic slowdown
CBSN
The Federal Reserve on Wednesday raised its benchmark interest rate by 0.75 percentage point and signaled it plans to keep rates higher for longer as it tries to douse red-hot inflation.
The Fed's target interest rate is now in the range of 3% to 3.25%, the highest level in 14 years. The bank's rate-setting panel also projected that the Federal Funds rate would hit 4.4% b year-end, up sharply from a projection of 3.4% in June. and 4.6% in 2023, up from a previous estimate of 3.8%.
Higher interest rates are likely to be a big drag on economic growth, officials noted in projections released along with the Fed's latest policy statement. Fed officials predicted GDP to expand by just 0.2% this year and 1.2% next year, down from a rosier forecast in June for 1.7% growth in 2022 and 2023.
