The Federal Reserve is raising its benchmark interest rate by 25 basis points. This is the second FOMC meeting in a row that the Fed has slowed the pace of rate hikes, which have tightened financial conditions across the economy and pushed the housing market into a downturn. 

With inflation and wage gains beginning to fall from their recent highs, investors were confident the Fed would continue to moderate, but stocks nonetheless slipped following the Federal Open Market Committee (FOMC) statements that more hikes were coming. 

"The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time," it said.

The FOMC also tweaked the statement to read that inflation “has eased somewhat but remains elevated." The consumer price index was 6.5 percent in December, down from a 2022 high of 9.1 percent  

The hike puts the Federal Funds Rate at between  4.5 percent and 4.75 percent. 

Federal Reserve officials have projected that the median rate could hit 5.1 percent in 2023. After today's increase, that would leave another 50 basis points for the rest of the year. 

The smaller hike was the eighth since the Fed started tightening in March 2022.