Most Fed watchers were predicting a 75-basis-point increase, and that's what the Fed delivered.
This then leaves us with the question of "What now?" The Fed doesn't know, and the weakness of the present economy will keep the Fed very cautious moving forward.
The Fact the Fed has no idea how things will go in response to Fed policy is emphasized by Powell's admission that the Fed isn't planning to offer any more forward guidance this year, which frees up the Fed to make more last-minute decisions and more aggressively make things up as it goes.
The Fed line for years has been that it would "Not allow" inflation to rise much above its two-percent standard, and that the Fed has "Many tools" to ensure this doesn't happen.
The Fed can claim the fed funds rate is now at the highest it's been at any time since 2008.
Given the Fed's chickening out in 2019-when it backed off rate increases after hitting only 2.5 percent-one might reasonably believe that it won't take much for the Fed to return to "Stimulus" as soon as the economic news gets even slightly worse.
As Mohamaed El-Erian puts it, there are fears that the Fed is returning to the "Stop-go Fed of the 1970s." That is, people are worried this Fed is like the Fed of Arthur Burns which never really addressed the easy-money-fueled price inflation of the 1970s and let the problem snowball until the early 80s. Powell himself may have made a nod to this in Wednesday's press conference when he acknowledged that a refusal to address price inflation now just "Raises the cost of dealing with it later."
https://mises.org/wire/fed-just-got-rid-forward-guidance-because-its-making-it-it-goes
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