In line with widely expected, the Federal Reserve (Fed) decided to hike 75 basis points for the third time in a row at the FOMC policy meeting early this morning.
This brought the central bank's benchmark lending rate to a new target range of 3%-3.25%, the highest since the global financial crisis in 2008.
The decision marks the Fed's toughest policy move since the 1980s to fight inflation, which will also cause economic 'pain' for millions of businesses and households in the United States.
Chairman Jerome Powell in his speech said that his main message has not changed since Jackson Hole, which is that policymakers are determined to get inflation down to 2% and they will continue to do so until the job is done.
Along with this increase, Fed officials signaled continued increases until reaching a 'terminal rate, or end point, of 4.6% in 2023.
This indirectly foreshadows a quarter point increase next year but no decrease.
The 'dot plot', which the Fed uses to signal the outlook for interest rates, shows the expectation of no rate cut until 2024.
Meanwhile, in the Fed's quarterly update of projections for rates and economic data, policymakers saw expectations for the unemployment rate rising to 4.4% by next year from the current 3.7%.
In line with that, the central bank also sees gross domestic product (GDP) growth slowing to 0.2% for 2022 down from 1.7% previously estimated, with the expected long-term rate just 1.8%.
As a result, Powell acknowledged that a recession is possible, especially if the Fed has to continue to tighten aggressively.
In the meantime, headline inflation is expected to drop to 5.4% this year and fall back to the Fed's 2% target by 2025.
