The Fed raised interest rates from 2.25% to 2.5% on Wednesday, the fourth rate hike this year.

Given that there have been nine official rate hikes since December 2015, the Fed is finally considering slowing down the hike rate, decreasing it to two hikes a year from 2019 onwards. The decision is still subject to change, however, and six members among the FOMC see three rate hikes as the appropriate rate for next year.

"The Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2% objective over the medium term," said the post-meeting statement.

Among other things, the FOMC lowered outlook for the long-run funds rate from 3% to 2.8%. The 2019 estimate declined to 2.9% from 3.1% and dropped to 3.1% from 3.4% for the two subsequent years after 2019.

As a result of the Fed's announcement, stocks dropped to their lowest level since September 2017. The Dow lost 513 points at its worst point.

Despite the recent market upheaval, Fed Chair Jerome Powell claims that there is no need to adopt accommodative economic measures at present: "Over the past year, the economy has been growing at a strong pace, the unemployment rate has been near record lows and inflation has been low and stable," Mr. Powell said. "All of those things remain true today."

The sharp market downturn comes as a result of investors expecting that the Fed would announce a more concrete plan to slow down hikes, which did not happen. Since economic growth is expected to decelerate next year in lieu of an inverted yield curve, the damage to investor confidence was even further exacerbated. The Fed also lowered expectations for economic growth in terms of GDP and inflation, contributing to investors' bearish outlook.

"Chairman Powell was threading the needle today," said Frances Donald of Manulife Asset Management. "He had to say that the economic picture is not as good as three months ago, while also saying that the pillars of the economy remain intact. And markets have to react, live, to that 'on the one hand, on the other hand' that Powell has to play in this economy."

Tech has been particularly negatively affected, with Facebook (FB  ) dwindling 39% since July due to privacy issues. That, coupled with a slowing economy, results in a bearish macroeconomic environment in which only less volatile assets are coveted - primarily those dealing in fixed income rather than equities.

Lowered expectations, coupled with the high interest rates, should slow the pace of prices increases and consumer sentiment that may reign in the overheated economy.