The Fed thinks prices will keep rising and business will slow down for the rest of the year

• Fed policymakers updated their economic projections on Wednesday for the first time since December.
• The estimates show the economy growing 2.8% in 2022, down from the prior forecast of 4% growth.
• Officials see inflation averaging 4.3% this year, way up from December's projection of 2.6%.

The Federal Reserve's outlook for the 2022 economy just got a whole lot bleaker.

The central bank published a new set of quarterly economic projections on Wednesday, offering its latest assessment of how policymakers see the recovery proceeding in the coming years. The previous projections came in December, before inflation ripped to its current highs and the Russian invasion of Ukraine brought new downside risks to the global economy. While the central bank sees the economic recovery still pushing forward through 2022, the rebound will be slower and bumpier than previously expected.

Inflation has already proved to be a major headwind in the new year, and the latest projections see price growth cooling much slower this year than previously expected. Fed officials now see prices growing 4.3% through 2022, up from the 2.6% pace they forecasted in December.

Policymakers also revised their estimates for 2023 and 2024 inflation slightly higher. While the projection shows price growth cooling from current levels, the 2022 average still sits uncomfortably above the Fed's 2% target.

Officials' outlooks for the pace of the recovery also worsened. Economic growth as measured by gross domestic product is now expected to average 2.8% this year. That's down from the previous estimate of a 4% gain. The following two years are expected to show GDP growth of 2.2% and 2%, respectively, both unchanged from the December estimates.

To be sure, the projections aren't official forecasts and don't play a role in the Fed's policy decisions. The estimates are sure to change in the coming months and the path of the recovery remains highly uncertain, Fed Chair Jerome Powell said in a press conference.

"Our policy has been adapting to the evolving economic environment, and it will continue to do so," Powell said. "No one knows with any certainty where the economy will be a year or more from now."

The revisions weren't all bad. The median projection for the 2022 unemployment rate held at 3.5%, matching the record low seen just before the coronavirus recession. The rate dipped to 3.8% from 4% in February, as the month's better-than-expected job gains signaled the labor market's recovery held strong into March.