Yahoo Finance Fed reporter Jennifer Schonberger breaks down the official decision by the Federal Reserve to raise interest rates by 25 basis points.

Video Transcript

JULIE HYMAN: I'm going to toss it over to Jen now. Jen Schonberger.

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JENNIFER SCHONBERGER: Rate hike. The Federal Reserve raising its benchmark interest rate by a quarter percentage point to a new range of 4 and 3/4 in 5%, and saying that the banking system remains sound and resilient. Now the Federal Reserve in a hat tip to setting the stage for nearing the end of its rate hiking cycle, doing away with key language for ongoing increases in interest rates in its statements.

Saying instead that, quote, "the committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation back to its 2% level over time." Now Fed officials left unchanged how high they see raising rates ultimately, keeping that peak in the range of 5 to 5 and a quarter, which is what they had penciled in back in December.

Though seven officials see raising rates higher than that, one official saying raising rates as high as 6%. No officials see rate cuts this year. Officials say they will closely monitor incoming information and assess the implications for monetary policy. Officials also continue to expect on writing off the balance sheet as planned.

Now on the banking system, officials said, recent developments are likely to result in tighter credit conditions for households and businesses, and to weigh on economic activity and hiring, and that the effects of this is all, quote, "uncertain." The Fed said that inflation risk remains elevated and that the central bank remains highly attentive to inflation risks.

Though they haven't really changed their forecast for inflation all that much, just seeing a tick up to 3.6% this year from 3.5 previously. On the employment front, officials say the job gains have picked up in recent months and are running at a, quote, "robust pace." They see the unemployment rate taking down to 4 and 1/2% from previously forecast 4.6%.

GDP also expected to only eke out just 4/10 of a percent this year, down from 5/10 of a percent previously projected back in December. This decision was unanimous. Back to you.