FOMC Summary: FED hikes 0.25% as forecasted, signals pivot at the end of 2023

The market had a strong rally in the second half of this afternoon's trading session after the very encouraging dovish signals in Jerome Powell's press conference.

Summary of key points:

• FED raises base interest rate by another 0.25% as the market expected

• FED will continue to raise interest rates “a few more times”

• FED will only raise interest rates 0.25% each time

• The economy shows signs of slowing but the labor market remains very strong

• Inflation remains very high, however it has begun entering a “disflationary cycle”

• Policy still needs to remain tight

• FED needs to see clearer evidence that inflation has been contained before stopping rate hikes

• Economic growth may be below expectations but no signs of deflation

Immediately after Powell finished his speech, the market priced in an additional 0.5% rate cut for the second half of 2023 compared to before the speech: