It's not exactly a pivot, but it's somewhat of a prelude to a pivot as the Federal Reserve raised its fed funds rate by 50 basis points to between 4.25% and 4.5% which is the highest level in 15 years.

Stocks were up a little under 1% going into the report but gave up these gains immediately after the release. By the end of the session, stocks closed off their lows. The bond market reaction was much more muted as yields on the long-end continued to leak lower following Tuesday's weaker-than-expected CPI report. The short-end was mostly unchanged as traders processed a higher terminal rate given movements in FOMC members' dot plots.

The dot plot also showed the consensus expectation that rates will remain elevated in 2023 with no rate cuts until 2024. This differs from the market's consensus which sees the terminal rate at 4.8% and 2 rate cuts by 2024.

Committee members also lowered their growth forecast for 2023 as they now expect an 0.5% increase in GDP which would be very close to a recession with 2022 expected to clock in at 0.5% as well. They also increased their estimate for core inflation to end the year at 4.8% from 4.5% at the September meeting.

At the press conference, Chair Jerome Powell emphasized the need to continue battling inflation and that any progress was not sufficient to alter policy. Most observers expect that the Fed would want to see monthly inflation actually go negative or pain in the labor market before it would consider pivoting.

Powell stuck to a mostly hawkish tone at the meeting by focusing on measures like services inflation and wage inflation which so far have failed to move lower. At the press conference, he said, "There's an expectation really that the services inflation will not move down so quickly, so we'll have to stay at it. We may have to raise rates higher to get where we want to go."

Currently, there's no constraint on the Fed hiking or keeping rates elevated given the resilience of the labor market and economy. November saw 263,000 jobs added, retail sales were up 1.3% on a monthly basis and 8.3% annually, and Q4 GDP is expected to come in at 3.2%.