Fed raises interest rates by a quarter point but signals inflation fight's not over

The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter of a point, further slowing its aggressive campaign to cool the economy amid growing evidence that stubbornly high inflation is finally starting to ease. 

The widely expected move puts the key benchmark federal funds rate at a range of 4.5% to 4.75%, the highest since 2007, from near zero in March 2022. It marks the eighth consecutive rate increase, following a half-point hike in December and four jumbo-sized 75-basis-point hikes before that.

Fed officials are in the midst of the most aggressive tightening campaign since the 1980s as they try to crush stubbornly high inflation that is still running near the highest pace in four decades, despite early signs of a slowdown.

The big question for investors is what comes next in the Fed's inflation fight – including how much higher officials plan to raise rates, and what they need to see before stopping the increases. Markets – which have bet on rate cuts in the second half of the year – fell after the Federal Open Market Committee signaled "ongoing increases" in the federal funds rate are necessary.