The S&P 500 (SPY  ) finished lower by 1.7% following the September Federal Open Market Committee (FOMC) meeting, where the central bank decided to raise rates by another 75 basis points.

Treasuries initially spiked higher after the decision but ended up finishing lower on the long-end with the 10 Year yield closing at 3.51% after hitting a peak of 3.68%. In contrast, the 2 Year hit a new high of 4.06%, indicating that the market expects the Fed to remain hawkish over the near term but normalize longer-term.

The rate decision wasn't exactly surprising given the pretty clear statements by FOMC officials and the recent spate of data showing that inflation seems to be plateauing rather than turning lower. And, this is especially worrisome as inflation is at its highest levels since the early 80s. Further, the longer the Federal Reserve's aggressive hawkish stance is intact, the more recession risk will increase.

The fed funds rate is now at 3-3.25% which is the highest since before the financial crisis. This is also the 3rd straight 75 basis point increase. The Fed also released its Summary of Economic Projections (SEP) which showed the consensus expectations of 1.25% of hikes in its next 2 meetings.

The SEP also indicated that the Fed expects to end hiking at around 4.6% in 2023 which implies a 0.25% increase next year and no rate cuts. This is certainly a more hawkish path than many traders were expecting a few weeks ago.

They also are anticipating pain for the economy as the Fed sees the unemployment rate rising to 4.4% next year from its current level of 3.7%. They also forecast 0.2% GDP growth in 2022, down from 1.7% in the last SEP.

The Fed also projected PCE to decline to 5.4% by the end of the year which is a decrease from its previous forecast of 6.3%. And, it sees PCE falling back to 2% sometime in 2025.

In his press conference, Fed Chair Powell reiterated his message from Jackson Hole that the Fed's primary focus is to bring inflation down to 2%. And, he added that a recession is possible and can't be predicted.

Many traders' takeaway from the press conference is that Powell will continue raising rates by 75 basis points until something in the economy shows signs of breaking.