The Federal Reserve made history on Wednesday, approving a third consecutive 75-basis-point hike in an aggressive move to tackle the white-hot inflation that has been plaguing the US economy. The supersized hike, which was unfathomable by markets just months ago, takes the central bank’s benchmark lending rate to a new target range of 3%-3.25%. That’s the highest the fed funds rate has been 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 economic pain for millions of American businesses and households by pushing up the cost of borrowing for things like homes, cars, and credit cards. Federal Reserve Chairman Jerome Powell acknowledged the economic pain this rapid tightening regime may cause. “No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” Powell said Wednesday afternoon in a press conference following the central bank’s policy announcement, which came after a two-day monetary policymaking meeting. The Fed’s updated Summary of Economic Projections, released Wednesday, reflects that pain: The quarterly report showed a less optimistic outlook for economic growth and the labor market, with the median unemployment rate inching up to 4.4% in 2023, higher than the 3.9% Fed officials projected in June and substantially higher than the current rate of 3.7%. US gross domestic product, the main measure of economic output, was revised down to 0.2% from 1.7% in June. That’s well below analysts’ estimates: Bank of America economists had estimated that GDP would be revised to 0.7%. Inflation projections also grew. Core Personal Consumption Expenditures, the Fed’s favored measure of rising prices, is projected to hit 4.5% this year and 3.1% in 2023, the Fed’s SEP showed. That’s up from June projections of 4.3% and 2.7%, respectively. Perhaps most important to investors seeking forward guidance from the Fed is the projection of the federal funds rate, which outlines what officials think is the appropriate policy path for rate hikes going forward. The numbers released on Wednesday showed that the Federal Reserve expects interest rates to remain elevated for years to come. The median federal funds rate projection was revised upwards for 2022 to 4.4% from 3.4% in June. That number rises to 4.6% from 3.8% for 2023. The rate was also revised higher for 2024 to 3.9% from 3.4% in June and is expected to remain elevated at 2.9% in 2025. Overall, the new projections show the growing risk of a hard landing, where monetary policy tightens to the point of triggering a recession. They also provide some proof that the Fed is willing to accept “pain” in economic conditions in order to bring down persistent inflation. The higher prices mean that consumers are spending around $460 more per month on groceries than they were this time last year, according to Moody’s Analytics. Still, the job market remains strong, as does consumer spending. Housing prices remain high in many areas, even though there has been a substantial spike in mortgage rates. That means the Fed may feel that the economy can swallow more aggressive rate hikes.