On Wednesday the Federal Reserve raised its policy rate by 50 basis point as widely expected to a range of 4.25%-4.50% during its last policy meeting for 2022, bringing the borrowing costs to the highest level since 2007.

This is the seventh consecutive rate increase for 2022, following four straight 75 basis point hikes, marking the fastest pace over the past 40-years. Policy makers signalled in its economic projections that rates are going higher for longer in order monetary policy to be sufficiently restrictive to return inflation to its target of 2%.

The central bank sees at least another 75 basis points of hikes in 2023 with median rates reaching 5.1%, or a target range of 5%-5.25%, up from 4.6% median rate expected at the end of September. GDP growth projections were revised higher to 0.5% vs 0.2% for 2022 but lowered to 0.5% vs 1.2% for 2023. Inflation forecasts were also revised higher to 5.6% vs 5.4% for 2022 and 3.1% vs 2.8% for 2023.

In the press conference Fed Chair Jerome Powell indicated that the Fed’s policies are getting close to restrictive territory and that a rate cuts to 4.1% are likely in 2024, which is above the 3.9% previously projected.

Investors received some positive economic news on Tuesday as the latest U.S. CPI report showed inflation is slowing, raising expectations that the Fed might halt rate hikes in 2023. These expectations are now blown, and equity markets were on a wild roller-coaster over the past two trading sessions as worries the U.S. economy could fall into a recession are rising.