To fight sky-high inflation, the Federal Reserve just raised interest rates three times faster than usual — and the most since since 1994

On Wednesday, the Federal Reserve raised its rate for the first time in more than 20 years.

After the conclusion of its June policy meeting, the central bank lifted its benchmark interest rate. The range of the rate's range is between 1.50% and 1.75%, which is the same as it was before the crash. The 75 basis point hike by the Fed is the first since 1994.

"The Committee decided to raise the target range for the federal funds rate to 1.5% to 1.75% percent and anticipates that continuing increases in the target range will be appropriate," the Fed said.

Esther George, the president of the Kansas City Fed, voted against the increase. In May, a half-point hike was approved and in March, a quarter-point hike was approved.

Markets had priced in a 0.75 point hike by the end of Monday's volatile trading session, which saw stocks plummet. The market expects a 0.75 point hike from the July meeting of the Fed. By the end of the year, traders expect the benchmark rate to be between 3% and 3.5%.

Friday's hotter-than- expected inflation data raised concerns that the Fed will have to act faster, even though investors had been anticipating another half-point hike from the June meeting. US inflation accelerated to a year-over-year pace of 8.6% in May, beating the average forecast of a 8.3% pace and marking the fastest price growth since 1981 There was no hope that March would be the peak of inflation because of the rise.

The committee is betting that the economy is strong enough to recover without the Fed's low rates.

There are various signals that the outlook is positive. The US added more jobs than expected last month, bringing the country closer to full employment. Spending at retailers and restaurants was higher in May than it was in April. The pre-crisis level of unemployment insurance filing suggests layoffs are not widespread.

Quarterly economic projections were published by policymakers. The committee's one-year inflation forecast rose to 5.2% from 4.3% as the Fed sees inflation proving harder to cool. In the next two years, price growth is expected to be 2.5% and 2%).

The committee's forecast for the unemployment rate went up. The rate is expected to go up to 4.1% in the next year. According to the outlook, the Fed's efforts to cool inflation will affect the labor market.

Policymakers expect interest rates to be cut in 2024. Thedot plot shows the benchmark rate rising above neutral levels and into restrictive territory in the future. Once inflation returns to more sustainable levels, the Fed will return to a more accommodative stance.