Full recap of the latest Fed rate hike and Chair Jerome Powell's market-moving news conference (2023)

While the Fed statement gave a softer tone welcomed by the marker, Chair Powell presented a different tone in his press conference, indicating that investors are getting ahead of themselves and thoughts about a potential pause would be "very premature."

"Chairman Powell made it clear that his bias is to err on the side of over-tightening rather than under-tightening in order to avoid the risk of inflation becoming entrenched," said Yung-Yu Ma, chief investment strategist, BMO Wealth Management. "At the end of the day, it's going to come down to inflation and labor market data in the coming months and quarters. The Fed's outlook may be less one-sided, but reaffirming its bias to fight hard against inflation – and the 2% inflation target – is likely to remain a market headwind until inflation conditions improve."

— Tanaya Macheel

Federal Reserve Chair Jerome Powell's comments were quite hawkish, which means the Fed still has a way to go to fight inflation, said Jack McIntyre, portfolio manager at Brandywine Global. The level of interest rates will also be higher than previously expected, he said.

"There were no hints of dovishness to indicate the Fed may be poised to pause," McIntyre pointed out.

The central bank saying it would consider cumulative tightening of monetary policy suggests it is leaving the door open to slow down the pace of hikes, not end them.

"Today was all about—and only about—giving the Fed flexibility or optionality to back off their path of 75 [basis point] hikes," McIntyre said.

"CPI reports, labor reports, and the ongoing impact of China's zero-COVID policy on global growth are all more important than any signal of Fed action. From this point on, we should think slower and steady…until something breaks."

— Michelle Fox

Powell said that while he believes it is "still possible" for the Fed to achieve a soft landing, the path has "narrowed."

"We've always said it was going to be difficult, but to the extent rates have to go higher and stay higher for longer it becomes harder to see the path. It's narrowed. I would say the path has narrowed over the course of the last year," Powell said.

— Jesse Pound

Traders bet the Fed could raise the fed funds rates to a high of 5.05%, before stopping its current rate hiking cycle.

The May contract reached that level after dipping to 4.93% after the Fed's policy statement opened the door to a potential reduction in the size of interest rate hikes. The Fed raised its target rate by three-quartes of a point Wednesday afternoon.

But a hawkish Fed Chair Jerome Powell, who spoke a half hour after the Fed statement, sent Treasury yields and fed funds futures higher.

"Powell thinks the bias is they should tighten more than they would otherwise think, just so they should take out some insurance," said Michael Schumacher of Wells Fargo. "His quote was that it's very premature to think about pausing. They're not going to pause anytime soon."

Stocks sold off after initially gaining after the Fed statement. Stocks fell as the 2-year yield reach a high of 4.59% during Powell's comments. The 2-year closely reflects Fed policy.

"It's pretty steadfastly hawkish so far. It's not really what I expected. He's hanging in there," said Schumacher.

— Patti Domm

In discussing recent labor market data, Jerome Powell said, "I don't see the case for real softening just yet" in the labor market.

Powell also said that he doesn't believe there is a "wage-price spiral" in the current inflation data but that the Fed wants to fight against that before it appears.

"Once you see it, you're in trouble," Powell said.

— Jesse Pound

Jerome Powell clarified that the Fed is not thinking about pausing its rate hikes.

"It is very premature to be thinking about pausing. People when they hear 'lags' think about a pause. It is very premature, in my view, to think about or be talking about pausing our rate hikes. We have a ways to go," he said.

— Jesse Pound

Jerome Powell said that the Fed could ease off of its three-quarters-point hike pace in December or January.

"As we come closer to that level and move further into restrictive territory, the question of speed becomes less important. ... And that's why I've said at the last two press conferences that at some point it will be important to slow the pace of increases. So that time is coming, and it may come as soon as the next meeting or the one after that. No decision has been made," Powell said.

As speed becomes less important, the terminal level of interest rates and the length that the Fed will need to keep rates there take precedent, Powell said.

— Jesse Pound

Changes to the Federal Reserve's post-meeting statement along with another 0.75 percentage point interest rate hike Wednesday should be enough to indicate that the central bank is getting ready to slow down the pace of interest rate increases, according to Capital Economics.

With the increase that takes the fed funds rate to a range of 3.75%-4%, the Fed "can afford to slow the pace of rate hikes" as it assesses the hikes approved this year, wrote Paul Ashworth, Capital's chief North America economist.

"Barring another upside inflation surprise in the October and November CPI reports, which we can't completely rule out, it looks like the Fed is laying the groundwork to shift down to a 50bp hike in December and, if we're right that core inflation will start to show signs of slowing soon, a 25bp rate hike at the January meeting next year," Ashworth added.

Fed Chairman Jerome Powell said at his post-meeting news conference that slowing the pace of rate hikes could be discussed at the December or January meetings.

— Jeff Cox

Fed Chair Jerome Powell said Wednesday that the central bank still has "some ways to go" before the current rate hike cycle is over, noting that "incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected."

The major U.S. stock indexes pulled back from their earlier session highs after Powell's comment during his news conference.

"Our decisions will depend on the totality of incoming data and their implications for the outlook of economic activity," Powell added.

— Fred Imbert

The Federal Reserve's language "sufficiently above neutral" is key in its post-decision statement, Morgan Stanley Investment Management's Jim Caron told CNBC.

The central bank said, "The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time."

"What the Fed just told us they are willing to get us to a level that is sufficiently above neutral and keep rates there and then wait for inflation to start to come down," said Caron, the firm's senior advisor on the fixed income team.

"So what that really signals today to me is that this is the start of the end game."

He sees the terminal rate at 5%, which would be 250 basis points above neutral.

"From a cost benefit perspective, it doesn't do as much damage to the asset markets and to the broader economy… by just hiking rates and hiking rates and hiking rates in order to achieve your inflation goal," he said.

— Michelle Fox

The Federal Reserve will likely go for smaller interest rate hikes after its latess 0.75 percentage point rate increase, according to Peter Boockvar, chief investment officer at Bleakley Financial Group.

The big change in the central bank's statement came when the Fed discussed factors that would influence policy going forward, saying that the committee will "take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

"That is quite an expansion and refinement in language from the 4th paragraph in September, that they repeated again today, when all they said was 'the committee will continue to monitor the implications of incoming information for the economic outlook,'" said Boockvar.

Going forward, he sees front loading as essentially over as the Fed watches the bigger picture that's unfolding as they fight inflation.

"Rate hikes from here will be more cognizant of the new economic environment we're in with respect to the much higher cost of capital and economic clouds that are circling," he said. "This is the Fed's way of telling us that a slowdown in the pace of future hikes is upon us."

—Carmen Reinicke

The federal funds rate, which is set by the Fed, is the interest rate at which banks borrow and lend to one another overnight. Although that's not the rate consumers pay,the Fed's movesstill affect the borrowing and saving rates they see every day.

By raising rates, the Fed makes it costlier to take out a loan, causing people to borrow and spend less, effectively pumping the brakes on the economy and slowing down the pace of price increases.

Read more on how on the different ways this latest monetary policy move means for the consumer.

— Jessica Dickler

BMO capital markets head of U.S. rates strategy Ian Lyngen said he was surprised by some of the Fed's statement language.

"'Cumulative tightening' and 'lagged impact' suggest that this will be the last 75 bp hike and in December the move will most likely be 50 bp. We're somewhat surprised to see the 'soft pivot' in the statement itself and we expect that Powell will double down on this narrative at the press conference. Therefore, the bullish move has more room to run," Lyngen said in a statement.

— Yun Li, Fred Imbert

The Fed announced its latest monetary policy decision Wednesday. Check out what changes the policymaking committee made from its Sept. 21 remarks.

— Jesse Pound

This is the language from the Fed statement traders appear to be keying on:

The Fed said it will "take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

— Jeff Cox

The major averages jumped after the Federal Reserve raised rates by 75 basis points, as was widely expected. The Dow traded more than 200 points higher, or 0.9%. The S&P 500 gained 0.5%, and the Nasdaq Composite advanced 0.4%.

For a full breakdown of today's market action, check out or live blog.

— Fred Imbert

The Federal Reserve raised rates by 75 basis points, or 0.75 percentage point, as expected. The increase pushes the fed funds rate to its highest level since January 2008.

— Jeff Cox

The Federal Reserve's potential move to smaller rate hikes may not be explicit in the policy statement and Jerome Powell's press conference on Wednesday, said James Ragan, director of wealth management research at D.A. Davidson

"Will there be discussion about the potential for 50 basis points in December? Probably not. I don't think he'll want to be that specific," Ragan said.

Ragan pointed to Powell previously saying that the Fed had hiked to the low end of a restrictive range as the example of the type of comment that investors are looking for.

"If they go to 3.75-4%, how restrictive do they view that? I think that's going to be important," he said.

Discussions about the state of the economy will also be closely monitored, Ragan added.

— Jesse Pound

The Federal Reserve is expected to announce that it is raising its fed funds target rate range by three-quarters of a point.

The Fed is also widely expected to signal that it could slow down the pace of rate hikes, and the market is pricing in a good chance of a smaller 50 basis point hike for December. A basis point equals 0.01 of a percentage point.

If the Fed decides to signal smaller hikes are coming, Fed Chairman Jerome Powell could be the messenger when he briefs the media at 2:30 p.m. ET.

Powell could make such a comment in response to a question, according to Jim Caron of Morgan Stanley Investment Management. But Caron stresses that Powell will not provide a definitive comment.

"He's going to hide behind the data," said Caron. The strategist said Powell will have to be careful in how he crafts the statement because he could raise market expectations for a less aggressive Fed.

"It's very hard for him not to get himself in trouble just in the normal course of discourse to say we are going to step down if the inflation data weakens,'" he said.

The hike would be the fourth 75 basis point hike in a row. A basis point equals 0.01 of a percentage point.

--Patti Domm

Here's a look at where markets stand about an hour before the Fed delivers its monetary policy decision:

• Dow Industrials: down 59 points, or 0.2%
• : down 0.6%
• Nasdaq Composite: down 1.1%
• 10-year Treasury yield: down 1 basis point at 4.04%
• 2-year Treasury yield: up 1 basis point at 4.55%

— Fred Imbert

Investor hopes of a dovish Fed pivot have grown recently, but BlackRock's Rick Rieder thinks the central bank will maintain a more aggressive policy stance.

The firm's chief investment officer of global fixed income said he expects Chair Jerome Powell to sound somewhat hawkish at his 2:30 p.m. ET news conference.

"He's got to be really careful not to be seen as easy or pivoting," said Rieder. "I think he's got to draw the line on 'inflation is our objective'... I think he's got to be aggressive about that. If he blinks and financial conditions ease too much...that's not the direction he or they want to go down."

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— Patti Domm, Fred Imbert

As the Fed delivers its latest monetary policy decision, there are two words investors will be looking for: "step down." As in, Wall Street will be looking for the central bank to "step down" from its current tightening path. The term was used by San Francisco Fed President Mary Daly.

The Fed isn't expected to stop raising rates anytime soon, but hints that this could be the last 0.75 percentage point increase could soothe a beaten-down stock market.

CNBC Pro subscribers can read more here.

— Jeff Cox, Fred Imbert