Investors adapt following the Fed's move to raise interest rates, but they are concerned about the looming clouds

As the US Fed Reserve begins to hike its rates, investors are trying to figure out how much monetary policy adjustment the economy can sustain, with some expecting an even harsher path ahead and others fretting about possible setbacks.

The Fed's first rate rise in 2018 was widely expected, but the central bank shocked markets by forecasting a quarter-percentage-point rate hike at each of its remaining six policy sessions this year.

With the beginning of what is expected to be a string of rate rises this year, the Federal Reserve put an end to pandemic-era monetary policy and stepped up the effort against persistently high inflation.

The shift, which is expected to start with a quarter-percentage-point increase in the Federal Reserve's benchmark interest rate, has been in the works since last fall and has already pushed up the price of mortgages and many other types of loans in anticipation of what the Fed will do to slow price rises that are at their fastest in 40 years.

However, the intensity around the Fed's policy meeting so far has grown as inflation has shown no signs of abating and might rise further as a result of Russia's attack of Ukraine, which spurred a surge in oil prices this month.

The precise words of the Fed's new policy statement, as well as the specifics of revised quarterly economic and interest rate projections, will provide the first concrete indication of how all of this has impacted lawmakers, and in particular if it has shaken confidence in the current economic expansion's ability to continue even as inflation falls.

Powell is having a "mini Volcker moment," according to analysts at research firm Bespoke, because of the speed with which the Fed is moving. Former Fed chairman Paul Volcker hiked rates abruptly in 1979 in a bid to manage double-digit inflation.

Nonetheless, others were encouraged by the Fed's clarity on its predicted rate hike path and its assertion that the economy is robust enough to absorb a policy strengthening, rising inflation, and unpredictable commodity prices in the aftermath of Russia's invasion of Ukraine.

Powell is having a "mini Volcker moment," according to analysts at research firm Bespoke, because of the speed with which the Fed is moving. Former Fed chairman Paul Volcker hiked rates abruptly in 1979 in a bid to manage double-digit inflation.

Nonetheless, others were encouraged by the Fed's clarity on its predicted rate hike path and its assertion that the economy is robust enough to absorb a policy strengthening, rising inflation, and unpredictable commodity prices in the aftermath of Russia's invasion of Ukraine.

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