The Federal Reserve raised its benchmark policy rate by 75 basis points for a fourth straight time on Wednesday — a move that was followed by hints officials may slow the pace of hikes while also eventually lifting the key federal funds rate to a higher level than previously estimated.

Wednesday’s increase brings the Fed’s benchmark rate, the federal funds rate, to a new range of 3.75% to 4%, its highest level since 2008.

Markets initially rose following the announcement but lost momentum after Chair Jerome Powell asserted in a post-meeting press conference that the U.S. central bank had a "ways to go" before pausing its monetary tightening campaign.

Analysts at Bank of America said the FOMC's policy statement had "hawkish and dovish notes," while JPMorgan's take on the event was blunt: "From dove to hawk in 30 minutes."

Leading up to the meeting, investors had hoped officials would hint at a sooner-than-expected policy shift. Powell clearly stressed that labor conditions remain too tight and inflation too high for any thought of a potential pause yet.

The Federal Reserve’s policy statement and subsequent remarks stoked a flurry of Wall Street reactions. Yahoo Finance compiled some of the takes below:

abrdn Senior Economist Luke Bartholomew:

“There were no big surprises in the Fed’s decision or its broader signaling, with the statement leaving open the possibility of slowing the pace of tightening. The new reference to monetary lags in the statement reflects the concern that the full impacts of the significant tightening the Fed has already delivered is yet to be felt by the economy, and so there is a real risk of overtightening and tipping the economy into a recession. The trick for the Fed is to acknowledge these concerns without giving markets permission to ease fiscal policy. We continue to think that this balancing act will prove too difficult for the Fed to manage, and that this tightening cycle is very likely to end in a recession.”

BlackRock Americas Head of iShares Investment Strategy Gargi Chaudhuri:

“We believe that today’s decision opens the door for a 0.5% hike at the December 14 FOMC meeting, data permitting. This view is in keeping with our standing investment recommendation that the market had priced too high a probability of an overly aggressive Fed, making valuations for shorter maturity Treasuries more attractive. That said, we continue to believe that the Fed will stay ‘higher for longer’ and that growth will slow to below trend.”

Pantheon Macroeconomics Chief Economist Ian Shepherdson:

“This strikes us as a clear signal that the wave of 75-basis-point hikes is over, unless the data between now and the December meeting - including two rounds of inflation and labor market reports - are unexpectedly awful. We don’t expect that, so we think markets will now gravitate towards a 50-basis-point hike in December. We’re not ruling out 25 basis points, if the data co-operate, but whatever happens in December, we doubt the Fed will be hiking again next year. They have done enough to make policy clearly restrictive, and intense downward pressure on inflation is now building in the pipeline.”

Lazard Asset Management Head of U.S. Equity Ron Temple:

“Investors need to focus on the signal, not the noise. Today’s FOMC acknowledgement that monetary policy acts with long and variable lags is not news. What is actually important is that there are still 1.86 open jobs per unemployed person in the US, double the ratio of 2019, and that core inflation, driven entirely by services, is running in excess of 6%. This is not an environment in which the Fed will pivot or signal a pivot. To do so would be monetary policy malpractice, and the Fed knows that. In December, the Fed will be in a different position with two more inflation reports and two more jobs reports. Then, perhaps, the FOMC can signal a deceleration in tightening, but not before.”

BNY Mellon Investment Management Head of U.S. Macro Sonia Meskin:

“In the press conference, Chair Powell gave no indication of when the FOMC plans to slow the pace of hikes. He referenced a still-strong U.S. labor market and high domestic inflation, while acknowledging economic challenges abroad, including in the U.K. Cumulatively, we take this meeting’s communication to indicate ongoing hikes at least into 1Q 2023 with a 50% probability of a step-down to 50 bps policy rate increase as early as the December 2022 FOMC meeting. This is consistent with our central forecast that the Fed policy rate reaches 4.50%-4.75% in Q1 2023.”

The team led by Bank of America Chief U.S. Economist Michael Gapen:

“We view the Chair's comments here through the Fed's goal of 2% inflation, services inflation, and labor market conditions. In the eyes of the Fed, housing and other interest rate sensitive sectors may be slowing, but strong labor market momentum and persistent labor market imbalances remain inconsistent with 2% inflation outcomes over time. In addition to seeing moderating growth in economic activity, the Fed also needs to see markedly slower employment growth before it can feel that policy is at an appropriate setting. While some of the edge may have come off of labor markets, Powell said that he 'doesn't see the case for a real softening just yet.’”

Comerica Bank Chief Economist Bill Adams:

“For the Fed to really pivot, and not just slow rate hikes, they will want to see slower total and core inflation, pullbacks in house prices and rents, slower wage growth, lower job openings, and likely an increase in the unemployment rate to be convinced that the slowdown in inflation that is expected in 2023 does not give way to another jump higher in 2024. More immediately, the risk of another spike in energy prices over the winter heating season is another reason why the Fed will want more evidence that inflation is coming down before coming off the rate hike warpath.”

Hargreaves Lansdown Senior Investment and Markets Analyst Susannah Streeter:

“The Fed is still desperate to kick inflation into touch, but the more aggressive moves in its playbook appear to be coming to an end with a gentler strategy on the way in the months to come. However, investors have been still left wondering exactly when this softer approach will take effect - sparking more volatility on the markets.”

LPL Financial Chief Global Strategist Quincy Krosby:

“Chairman of the Federal Reserve Jerome Powell is staying the course, and explaining why it's necessary. The market's response is negative as it attempts to decipher if the December Fed meeting will begin a cycle of lower rate hikes. Powell has adhered to earlier remarks that the path to price stability has been difficult, with an overheated labor market. He emphasized inflationary pressures are slow to edge lower and that the Fed needs to remain resolute. Based on the equity market's reaction, there's more work needed to tackle inflation.”

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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