Fed policy is restrictive only as far as real interest rates are positive and rising. The 2YR real rate is still -1%….negative 1%. Lastly, the Fed may be finally talking the talk, but real rates need to walk the walk. The Fed doesn’t want to be in this same exact position next meeting, so they laid out expectations for the next few years, but, as I said, it appears that the Fed is willing to inflict a lot of damage on the market in order to bring inflation down. Ultimately, the Fed caught up to market’s pricing expectations on where rates would end this year. Though, I would not look too into the optimistic growth outlook, as Fed Chair Powell knows that talking about a strong economy makes it easier to aggressively hike rates. Powell made encouraging comments about the current state of the economy but also hedged that by explaining how difficult both a soft landing and getting inflation back to 2% will be. In the press conference, Powell noted that either a 50bps or a 75bps hike is likely at the July meeting. We believe this is very hawkish meeting that shows the number one goal for the Fed is fighting inflation – no matter the damage. They increased the unemployment rate to 4.1% next year.They took out the line: “labor market to remain strong” from the pre-written statement,.The fact that they did raise rates by 75bps,.My Big Takeaway? The Fed is willing to inflict a lot of damage on the market in order to bring inflation back down – for 3 main reasons: No change to the Quantitative Tightening.4.3% previously, but that figure is seen falling to 2.6% in 2023 and 2.2% in 2024. Inflation expectations were also revised sharply higher with the PCE price index expected to hit 5.2% in 2022 vs.Labor, the second and forgotten aspect of the Fed’s dual mandate, remained steady, but expectations did uptick +0.5% by EOY 2023 to 4.1%.growth expectations in 2022 were revised down from 2.8% in March to 1.7% at this week’s meeting. The Fed’s “ dot plot” revealed that the FOMC now plans to raise rates to 3.4% by the end of 2022, up meaningfully from the March median projection of just 1.9%.They also reiterated that they are “strongly committed” to getting inflation back down to the objective of 2%. In the meeting statement the committee noted that economic activity remains strong while inflation is still elevated. The FOMC voted 9-1 to raise the fed funds rate by 75bps to a range of 1.50% to 1.75%., which was the largest rate hike since 1994. Did they deliver? That remains a hotly debated topic. Yesterday was the Fed’s moment – their moment to try to regain credibility in the eyes of the market regarding inflation. Thus, not a complete surprise for the market. Yet, due to Friday’s CPI report and a “mysterious” WSJ article on Monday, it created an environment where 75bps became the “base case”. Just a few weeks ago, it seemed very unrealistic that the market would get a 75bp hike in June. Obviously, yesterday’s news regarding the market was all about the Fed.