In a move widely anticipated by Wall Street, the Federal Reserve raised its benchmark interest rate by a quarter percentage point and suggested one more increase could be in the cards before year-end.

The rate hike moves the central bank's target range on the overnight funds rate to 3.75% to 4%. The tougher stance on monetary policy comes as the Fed grapples with stubborn inflation, worsened by a recent rebound in oil prices.

Historically, the Fed tends to raise rates more than once after it has embarked on a hiking cycle. To that end, Morgan Stanley economists this week changed their forecast from no rate hikes to two, basing this outlook partly on Fed Chairman Kevin Warsh's public statements as well as the leg higher in oil prices, inflationary expansion in artificial intelligence and a broader shift toward expectations for hikes. The firm sees another increase coming in December.

"Not doing so would risk loss of credibility and a potential rise in longer-term risk premia similar to the reaction after the July FOMC meeting," wrote Michael Gapen, chief U.S. economist for Morgan Stanley.

Fed Chairman Warsh is expected to provide further insight into the central bank's decision and the way forward at 2:30 p.m. ET.