The Federal Reserve made history on Wednesday by approving a third straight hike of 75 basis points in an aggressive move to tackle white-collar inflation plaguing the US economy.   

  The outsized hike, which was unfathomable by markets just months ago, takes the central bank’s key lending rate into a new target range of 3%-3.25%.  This is the highest Fed Funds rate since the global financial crisis in 2008.   

  Wednesday’s decision marks the Fed’s toughest policy move since the 1980s to fight inflation.  It will also likely cause financial pain to millions of American businesses and households by raising the cost of borrowing for things like homes, cars and credit cards.   

  Federal Reserve Chairman Jerome Powell has acknowledged the financial pain this rapidly tightening regime can cause.   

  “We have to keep it until the job is done,” he told a central bank forum in August in Jackson Hole, Wyoming.  “While higher interest rates, slower growth and softer labor market conditions will reduce inflation, they will also bring some pain to households and businesses.  These are the unfortunate costs of deflation.  But a failure to restore price stability would mean much greater pain,” he warned.   

  The Fed’s updated Summary of Economic Projections, released Wednesday, reflects that pain: The quarterly report showed a less upbeat outlook for economic growth and the labor market, with the unemployment rate averaging 4.4% in 2023, higher than the 3.9% Fed officials predicted in June and significantly higher than the current rate of 3.7%.   

  US gross domestic product, the main measure of economic output, was revised up to 0.2% from 1.7% in June.  That’s well below analysts’ estimates: Bank of America economists had estimated GDP would be revised up to 0.7%.   

  Inflation forecasts also rose.  Core Personal Consumption Expenditures, the Fed’s favored measure of price growth, is projected to reach 4.5% this year and 3.1% in 2023, according to the Fed’s SEP.  This is higher than the June forecasts of 4.3% and 2.7%, respectively.   

  Perhaps most important to investors looking for future guidance from the Fed is the federal funds rate projection, which outlines what officials believe is the appropriate policy path for future rate hikes.  Figures released Wednesday showed the Federal Reserve expects interest rates to remain high for years to come.   

  The median federal funds rate forecast was revised upward for 2022 to 4.4% from 3.4% in June.  That number rises to 4.6% from 3.8% in 2023. The rate was also revised higher for 2024 to 3.9% from 3.4% in June and is expected to remain elevated to 2.9% in 2025.   

  Overall, the new forecasts point to a growing risk of a hard landing, where monetary policy is tightened to the point of triggering a recession.  They also provide some evidence that the Fed is willing to accept “pain” in economic conditions in order to reduce persistent inflation.   

  The higher prices mean consumers are spending about $460 more a month on groceries than they did last year, according to Moody’s Analytics.  However, the labor market remains strong, as does consumer spending.  House prices remain high in many areas, even though mortgage rates have risen significantly.  That means the Fed may feel the economy can swallow more aggressive rate hikes.   

  Fed Chairman Powell is scheduled to speak at a press conference at 2:30 p.m.  ET to discuss the central bank’s policy announcement.   

  This story is developing and will be updated.