a sign for the federal reserve board of governors is seen at the entrance to the william mcchesney martin jr building ahead of a news conference by federal reserve board chairman jerome powell on interest rate policy in washington us september 21 2022 reuterskevin lamarque new york sept 21 reuters  the federal reserve raised its target interest rate by threequarters of a percentage point to a range of 300325 on wednesday and signaled more large increases to come in new projections showing its policy rate rising to 440 by the end of this year before topping out at 460 in 2023 to battle continued strong inflation the us central banks quarterly economic projections meanwhile showed the economy slowing to a crawl in 2022 with yearend growth at 02 rising to 12 in 2023 well below the economys potential the unemployment rate is projected to rise to 38 this year and 44 in 2023 inflation is seen slowly returning to the feds 2 target in 2025 stocks the sp 500 spx turned lower lost 227 points or 059 to 383323 bonds benchmark 10year note yields briefly spiked then fell  the price is up 232 to yield 35652 from 3573 late on tuesday the 2year note yield surged the note was last off 732 in price to yield 40805 up from 3964 forex the dollar index rose 1017 with the euro down 123 to 09847 the 75 basis points increase was expected what the market is reacting to is the update to expectations for rates for the outyears they moved significantly higher  the market wouldve liked to see the number come down in 2023 what its telling us is that the fed is expecting to rates to continue to move higher into 2023 the silver lining is that six members think rates are going to stay steady and one thinks they can come down in 2023 now the question is what is the market is going to price in here what do we really believe will happen theres a camp that says whatever the fed guides to has typically been the floor and not the ceiling this communication is basically signaling that the feds going to continue to be aggressive and remain hawkish thats going to continue to put pressure on stocks it doesnt leave a lot of room to the upside for investors going into the end of the year right now it doesnt feel great because the feds going to stay hawkish theyre not backing down where we end the day is going to be predicated on powells speech “the unusual has become usual not only did the fed hike another unusually large 75 bps today it is basically saying it will do it again in november thinking that these types of hikes aren’t going to cause pain down the road is the triumph of hope over experience” “the stock market is taking this in stride it did go down a little bit but it’s not too dramatic the updated statement of economic projections suggest that the fed is reluctantly slowly catching up to reality in terms of their anticipation for everything – for inflation for core inflation for gdp you look at the difference between december to march to june to now in all of those metrics and what they are projecting and they are finally catching up with what the market has already known for quite some time so perhaps the equity market was a little bit optimistic they might soften the language which they did not do but in general most of this was priced into the equity market a lot of times you see the market do something on the day of and then something else the next day investors might want to reserve judgment until tomorrow” “this is as hawkish as it gets and the only way to back off it is in the press conference if powell says were going to remain data dependent” “as we found through history the initial knee jerk reaction tends to be wrong but markets really do want to see powell signal some flexibility moving forward in order to kind of stabilize the market so i think you want to hear him say data dependent flexible but at the same time stand firm in terms of their commitment to bring inflation down” “it was a rather hawkish 75 basis point hike and the fed left the door wide open for even more rate hikes before the end of the year” “the dot plots confirm more hikes are coming than were previously expected “the fed is willing to produce a good deal of pain to the economy and potentially to the stock market in order to rein in the runaway inflation we’ve been seeing this year” “the economic expectations from the fed are quite disappointing the economy is quickly slowing” “yields and the dollar both moved higher on the hawkish fed stance pressuring stocks once again” the fed is willing to produce a good deal of pain to the economy and potentially the stock market in order to rein in the runaway inflation we’ve been seeing this year the economic expectations from the fed are quite disappointing the economy is quickly slowing the fed is okay with this with their hawkish stance in order to slow inflation the powell press conference is coming up he will continue to pull his inner paul volcker and stress how important it is to bring inflation under control even if it potentially slows the economy and causes pain for most consumers” compiled by the us finance  markets breaking news team