wednesday postfed the federal reserve’s rate decision today wasn’t a curveball for the market its 50basispoint hike was right down the middle putting the federal funds rate in a range between 425 and 45 what might have spun wall street around—at least initially—were the fed’s projections for future rate hikes and economic conditions these bearish forecasts sent the market down about 1 in the minutes after the rate announcement a late rebound from initial selling might be related to thinking that the fed is now closer to its peak and may be able to slow hikes in 2023 even if the peak ultimately ends up being higher than analysts had anticipated still the postannouncement wall street recovery looked unsteady as the fed’s postmeeting statement and fed chairman jerome powell’s press conference generally threw a wet blanket on wall street’s holiday spirit by the end of the day the recovery failed and stocks closed down though off their earlier lows the central bank showed no sign of any “pivot” to lower rates in the near future instead delivering a firm message that rates aren’t nearly high enough yet to tame inflation need to go higher and perhaps stay there longer rates above 5 by the end of next year are now penciled in by the federal open market committee fomc with no hints of rates coming down until 2024 that’s a more bearish picture than market participants had baked in some analysts were expecting rates to begin ticking down in late 2023 the fomc now sees a terminal or peak rate of between 5 and 525 by the end of next year up about 50 basis points from the previous terminal rate projection in september this reflects ideas that overheating—particularly in the services part of the economy—continues to push prices higher specifically the fed has its eyes on wages and housing “we see a very strong labor market where jobs growth and wages are very high vacancies are very elevated and there’s an imbalance of supply and demand” powell said in his remarks to the media “that is likely to take a substantial period to go down” the goal is to take the fed’s policy to a level where it restricts inflation and the fed won’t consider rate cuts until it’s convinced inflation is “coming down in a meaningful way” powell said the question now he said is less about how quickly the fed raises rates and more about finding the right level that puts inflation on a sustainable downward path powell made it very clear the current rates even with today’s hike aren’t close to that level yet even by the end of 2024 the fed’s dotplot sees rates between 4 and 425 not much below current levels   the fomc now sees gross domestic product gdp growing just 05 next year down from its prior 12 projection   it also raised its 2023 unemployment rate estimate forecast to 46 from the previous 44   core personal consumption expenditures pce inflation the fed now said will be 48 in 2022 up from its previous 45 outlook   the fed expects core pce of 35 in 2023 up from its previous 31 weaker economic growth forecasts and higher inflation projections raise questions about the path of corporate earnings with many analysts already saying the 5 earnings growth expected by wall street for 2023 may be overdone this could weigh on the market the fed doesn’t see inflation getting back toward its 2 goal until 2025 and said inflation risk is still to the upside though inflation expectations among consumers remain well anchored “the longer the current bout of high expectation continues the greater likelihood that expectations of even higher inflation in the future will become entrenched” powell warned in his press conference on a more positive note goods inflation does show signs of improvement according to powell within an hour of the fed decision markets had clawed back their losses and the 10year treasury yield was back below 35 compared to the steep selloff following the fomc’s november 12 meeting this reaction seems milder today’s rate hike was the fed’s seventh of the year and its second hike of 50 basis points   the process began on march 17 with a 25basispoint increase taking rates up from near zero where they’d been parked since covid19 slammed the economy shut in march 2020   the fed followed with a 50basis pointer in may and then an unprecedented four consecutive 75basispoint hikes in june july september and november   today’s rate increase puts the fed funds rate at levels last seen in late 2007 but at that time the fed was in the process of lowering rates just as the great recession of 20082009 was taking hold   the last time it raised rates to above 4 was in december 2005 that was when the fed was trying to snuff the bubble developing in the real estate market but higher interest rates didn’t do the trick only a massive recession popped that bubble today investors hope the fed can engineer a “soft landing” where higher rates only snuff out inflation not the economy as a whole but that’s a very difficult task 230000 tomorrow morning brings november’s retail sales report before the open see below and a look at initial weekly jobless claims last week the initial claims tally was 230000 and wall street analysts expect thursday’s number to be in that ballpark 1671 million however the more important data point to watch for in the claims report could be continuing claims those rose for an eighth straight week to 1671 million in the last week of november the highest since the week ending february 5 initial claims however averaged 224000 so far in q4 a level consistent with a tight labor market according to economic data site trading economics   the dow jones industrial average® dji dropped 142 points or 042 to 33965   the sp 500® index spx fell 24 points or 06 to 3995 grabbing food after a fillup the fomc meeting is over and the consumer price index cpi data is in the rearview mirror but the week still has some big data in store—or stores to be more precise november retail sales are due before thursday’s opening bell back in october retail sales jumped a massive 13 also 13 excluding automobiles but wall street expects a sharp november pullback the consensus view is for a 01 decline in the headline number and a 02 increase in retail sales excluding autos according to research firm briefingcom it’s an important report because it’ll provide clues to whether october’s surge following an unchanged monthly number in september was some sort of blip or the start of a new higher trend in consumer spending food and beverage sales played a big role in the october bump so did gas stations food price growth didn’t retreat much in november according to the cpi data but gas prices did fall remember that retail sales aren’t adjusted for inflation so slower inflation growth should help put the thumb on the scale for tomorrow’s data dec 19 no earnings or data of note dec 20 november housing starts and building permits and expected earnings from general mills gis and nike nke dec 21 november existing home sales and expected earnings from rite aid rad and micron mu dec 23 november durable orders november personal income and spending november pce prices november new home sales and final december university of michigan consumer sentiment this post contains sponsored advertising content this content is for informational purposes only and not intended to be investing advice