The U.S. Federal Reserve raised its benchmark interest rate to its highest level in 15 years on Wednesday, suggesting the fight against inflation by tightening monetary policy is far from over, despite some encouraging signs recently.CNBC.

As expected, the Federal Open Market Committee voted to raise the overnight lending rate by half a percentage point, bringing it to a target range of 4.25% to 4.5%.

The increase snapped a streak of four consecutive hikes by three-quarters of a percentage point, the most aggressive monetary policy changes since the early 1980s.

Along with the hike came a sign that officials expect to keep interest rates high next year without a cut until 2024.

The Fed projects borrowing costs to rise by at least 0.75 percentage points through the end of 2023, along with rising unemployment and near-stagnation in economic growth.

The expected “terminal interest rate,” or the point at which officials expect to stop raising rates, was set at 5.1 percent, according to a “scatter chart” of expectations by individual FOMC members.

Investors reacted negatively to expectations that interest rates could stay higher for longer, and stocks gave up earlier gains.

The new level marks the highest level for the federal funds rate since December 2007, just before the global financial crisis and after the Fed aggressively eased policy to combat what turned into the worst economic downturn since the Great Depression.

This time, the Fed is raising rates in an economy that is expected to die in 2023.

Members plan to raise interest rates until they reach an average of 5.1% next year, equivalent to a target range of 5%-5.25%. At this point, Fed officials will likely pause to allow the effects of monetary tightening to take effect in the economy.

The consensus then points to a cut in the key rate in 2024 to 4.1% by the end of that year.

The FOMC’s policy statement, adopted unanimously, was largely unchanged from the November meeting. Some observers had expected the Fed to change its language about what it believed to be an “increase under way.”

Fed officials believe that raising interest rates is helping to flush money out of the economy, reducing demand and ultimately lowering prices after inflation hit its highest level in 40 years.

The FOMC lowered its growth targets for 2023, putting GDP growth expected at just 0.5%, just above what would be considered a recession.

The GDP forecast for this year is also estimated at 0.5%.

In the September forecasts, the committee expected the economy to grow by 0.2% this year and 1.2% in the future.

The committee also raised its average estimate of core inflation to 4.8%, up 0.3 percentage points from the September forecast.

Deputies have slightly increased their forecasts of the unemployment rate for this year and next year.