Federal Reserve greenlights rate hike cycle, borrowers brace for higher payments

As widely expected, the Federal Reserve announced Wednesday at the conclusion of its two-day meeting a quarter-percentage point interest rate increase — nearly two years to the day after the central bank slashed its benchmark federal funds rate to zero in a bid to cushion the blow of a deep recession triggered when the United States shut down in the early days of the pandemic. 

The Fed said it would raise the federal funds rate to a range of 0.25- 0.50 percent, a move that is likely just the kickoff of a lengthier rate hike cycle. The CME FedWatch Tool projects a roughly 35 percent chance that the benchmark rate will be between 1.75 to 2 percent by the end of the year.