- Fed officials surprised markets after their two-day meeting with a forecast for two rate hikes in 2023, after previously predicting none.
- The Fed also said it discussed tapering its bond program, as expected, but it provided no timeline on when it would begin the process.
- Stocks fell and Treasurys sold off as the Fed made its first baby steps toward tightening easy policies it has had in place since the pandemic
The Federal Reserve's hawkish tone sent stocks lower and bond yields higher, but for now, the central bank has managed to inch closer toward tighter policy without triggering massive market angst.
Even so, concerns remain about whether inflation is really just fleeting, and whether the central bank can continue to manage the path away from its extraordinary policies smoothly.
The Fed surprised investors Wednesday by including two interest rate hikes in its economic forecast for 2023 after having none in its last forecast in March. But it did not give any time frame on how long it will be before it begins to trim its bond purchases.
"You've got an oil tanker. You've got to turn the wheel way before, and then the ship starts turning well down the way. That's what we saw," said Vincent Reinhart, chief economist at Mellon.