Federal Reserve raises interest rates by 50 basis pointsThe U.S. economy has slowed significantly from last year's rapid pace: Fed Chair Jerome Powell

The stock market gave up earlier gains after investors reacted negatively to the idea that rates would stay higher. Chairman Powell said during the press conference that it was important to keep up the fight against inflation so that the expectation of higher prices doesn't become ingrained.

The chair said at the news conference that inflation data for October and November showed a reduction in the monthly pace of price increases. It will take a lot more evidence to be sure that inflation is on a downward path.

The fed funds rate has not been this high since December of 2007, just before the global financial crisis and the worst economic downturn since the Great Depression.

The economy is expected to be in a moribund state in the years to come.

The members penciled in increases for the funds rate until it hits a median level of 5.1% next year. The impact of monetary policy tightening is likely to be paused at that time.

The consensus was that the funds rate would be 4.1% by the end of the year. The benchmark settles into a neutral level of 2.5% after another percentage point of cuts in 25 years.

There was a wide dispersion in the outlook for future years, indicating that members are uncertain about what is ahead for an economy dealing with the worst inflation it has seen since 1980.

Multiple members saw rates going much higher than the median point for the next two years. Voters and nonvoters made up seven of the 19 committee members who saw rates rise above 5.05% for the year. There were seven members who saw their rates go up.

The policy statement was almost the same as it was in November. The phrase "ongoing increases" remained in the Fed's statement despite expectations that it would be changed.

After inflation spiked to its highest level in more than 40 years, Fed officials believe raising rates helps take money out of the economy and reduces demand.

GDP gains will be barely above what would be considered a recession thanks to the lowered growth targets. This year's GDP outlook was put at. The projections for this year and next were made in the fall.

The committee raised its anticipated core inflation measure to 4.8%, up from the previous outlook. The unemployment rate outlook for this year was slightly lowered by members.

Progress in the inflation fight has been shown in reports.

The Labor Department reported Tuesday that the consumer price index rose just 1% in November, a smaller increase than expected. The coreCPI rate excludes food and energy. The measures were the lowest in a long time. The core personal consumption expenditures price index fell to a 5% annual rate in October.

All of those readings are above the Fed target. Officials have warned against relying too much on trends over a few months, as they stressed the need for consistent declines in inflation.

Services inflation is still too high despite the recent news, according to Powell.

He said that there was an expectation that the service inflation would not move down so quickly. We might have to raise rates higher to get there.

Employers are still hiring, and consumers are still spending, so central bankers still feel they have room to raise rates.

The Atlanta Fed is estimating GDP growth of 3.2% for the fourth quarter, while the nonfarm payrolls grew by 263,000 in November. Consumers have been weathering the inflation storm and retail sales were up 8.3% in October.

Outsized demand for goods, Russia's invasion of Ukraine, and trillions of monetary and fiscalStimulus caused inflation.

After dismissing the price increases astransitory, the Fed started raising interest rates in March of this year. The Fed hadn't raised rates more than a quarter point in 22 years.

Quantitative tightening is a process in which the Fed allows proceeds from maturing bonds to roll off its balance sheet each month.

A $332 billion decline in the balance sheet has been caused by a capped total of 95 billion being allowed to run off each month. At $8.63 trillion, the balance sheet is $8.63 trillion.