Fed Holds Rates Steady But Signals More Hikes Ahead As Markets Bet on Premature Rate Cuts

Federal Reserve announced no change in interest rates, leading to a rally in markets. However, markets may have misread Fed's statement.

Higher long-term rates expected to slow economy, but Fed fund futures predict lower rates into 2024-2025.

Fed acknowledges stronger economic growth now vs 9 months ago. Only raised rates 75 bps in 2022 despite projecting 500 bps total.

If inflation does not show progress, Fed likely to raise rates 25 bps in Dec and project holding through 2024.

Markets seem overly optimistic on lower rates. Investors should brace for potentially volatile holiday season.