The rate hikes will eventually mean higher loan rates for many consumers and businesses.
The central bank's policymakers expect inflation to remain elevated, ending 2022 at 4.3%, according to updated quarterly projections they released Wednesday. That's far above the Fed's 2% annual target. The officials also now forecast much slower economic growth this year, of 2.8%, down from its 4% estimate in December.
In a statement it issued after its latest policy meeting, the Fed noted that Russia's invasion of Ukraine and ensuing sanctions by the West"are likely to create additional upward pressure on inflation and weigh on economic activity." One member of the Fed's rate-setting committee, James Bullard, head of the Federal Reserve Bank of St. Louis, dissented from Wednesday's decision. Bullard favored a half-point rate hike, a position he has advocated in interviews and speeches.
Yet many economists worry that with inflation already so high - it reached 7.9% in February, the worst in four decades - and with Russia's invasion of Ukraine driving up gas prices, the Fed may have to raise rates even higher than it now expects and potentially tip the economy into recession.
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