Year-end FOMC: Market surprised by FED's tone

FED officially raises rates by another 0.5% after yesterday's FOMC meeting, as previously outlined. However, investors were surprised by the “hawkish” tone of Powell and FOMC members, warning that although the pace of rate hikes has slowed, rates will need to be higher and for longer to bring inflation back to the long-term 2.0% target. Specifically:

• FED's rate projections higher than market expectations:

• FED Dot Plot shows peak rates at ~5.5%, higher than ~4.5% mark in September meeting:

• There will be more hikes in the first half of 2023 than planned in September: