The Federal Reserve raised its target interest rate again on Wednesday in an effort to squash high inflation that has surged to the highest in 40 years, saying rates are going to go sharply higher before the end of the year.

It was the third consecutive increase of 0.75 percentage point, taking the rate to 3.0-3.25 percent. It is the highest the fed funds rate has been since the global financial crisis in 2008.

Its policy rate will rise to 4.40% by the end of this year before topping out at 4.60% in 2023 to battle continued strong inflation.

The U.S. central bank's quarterly economic projections showed the economy slowing to a crawl in 2022, with year-end growth at 0.2%, rising to 1.2% in 2023, well below the economy's potential. The unemployment rate is projected to rise to 3.8% this year and 4.4% in 2023. Inflation is seen slowly returning to the Fed's 2% target in 2025. 

The quarterly report showed the unemployment rate is forecast to rise from 3.8% at the end of 2022 to 4.4% at the end of 2023, which is above the half-percentage-point rise in unemployment that has been associated with past recessions.

"You can only steer the ship towards the storm for so long, but eventually there comes a time when you need to batten down the hatches and with the Fed's third consecutive 75 basis point rate hike over the past four months, market participants should be looking for cover to weather the upcoming storm," said Charlie Ripley, senior investment strategist at Allianz Investment Management, as per CNBC.

"The Fed was late to recognize inflation, late to start raising interest rates, and late to start unwinding bond purchases. They've been playing catch-up ever since. And they're not done yet," said Greg McBride, chief financial analyst at Bankrate, Reuters reported.