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Fed officials announce 75-basis point hike

Yahoo Finance's Jen Schonberger reports on the Federal Reserve's decision to raise its benchmark interest rate by 75 basis points at today's FOMC meeting.

Video Transcript

DAVE BRIGGS: OK, let's get to--

JENNIFER SCHONBERGER: 75 basis point rate hike. The Federal Reserve raising its benchmark interest rate by 3/4 of a percentage point to a new range of 3% to 3 and 1/4%. Fed officials see raising the Fed funds rate higher and holding it there longer. Looking ahead, by the end of this year, they see the Fed funds rate ending the year at 4.4%.

And they see the Fed funds rate ending next year at 4.6%. That's higher than what projections were in June when the Fed funds rate was projected to end this year around 3.4% and next year by 3.8%. It's not until 2024 that Fed officials see rates starting to come back down. At that point, though, 3.9%, so that would actually be higher than previously forecast back in June.

Now, why is this the case? Well, Fed officials see inflation remaining high this year. They actually raised their forecast for inflation to 5.4% overall, a faster clip than previously forecast. Excluding volatile food and energy they see 4 and 1/2% on inflation this year. They still see core inflation remaining at 3.1% next year, not coming back down to that 2% range until 2024. So some heightened inflation here.

Now, as far as the unemployment rate is concerned, they see the unemployment rate at 3.8% this year. That's up from previously forecast, rising again to 4.4% next year. The Fed did upgrade its economic assessment of the economy, saying in a statement that indicators of spending and production point to modest growth. That is an upgrade from having softened back the previous meeting.

Now, the Fed, though, did downgrade its outlook for the economy. It only sees GDP at 0.2% growth this year before rebounding back to 1.7% next year. Guys.

RACHELLE AKUFFO: All right, thank you. Our Jen Schonberger there, giving you that breaking news that the Fed there raising interest rates there by 75 basis points.