The Federal Reserve lowered its US economic growth forecast and raised its inflation estimate for 2022, according to its projections materials released on Wednesday.

The central bank now expects American economy to grow 1.7% this year, down from its previous projection of 2.8% growth that was made in March.

The personal consumption expenditures (PCE) price index, the central bank's preferred inflation indicator, is expected to come in at 5.2% in 2022, up from the 4.3% estimate made in March.

Core PCE inflation was also revised up to 4.3% for this year, from 4.1% forecast that was made three months ago.

The Fed anticipates its benchmark interest rate to end this year at 3.4%, an upward revision of 1.5 percentage points from the March estimate of 1.9%, according to the "dot plot" of the Federal Open Market Committee (FOMC) members’ expectations.

The FOMC then expects the benchmark interest rate to rise to 3.8% in 2023, which is a full percentage point higher than the March estimate of 2.8%.

The new projections came as the Fed raised its benchmark interest rate by 75 basis points to carry the federal funds rate to 1.5%-1.75% range, marking its biggest rate hike in 28 years, in order to tame record-high inflation in the country.

The US annual consumer inflation climbed to 8.6% in May, the highest level in more than 40 years./aa