The Fed and managing expectations

The Fed will speak in a few hours and the almost no one is expecting rates to remain the same. As discussed earlier the markets seem to be taking this rate hike in stride because the Fed seems to have waited to the very last minute to leave make sure there was nothing that could support a delay in rate hiking. What will be important to look for is the language at the conference. How the conference manages the expectations of the Fed going forward will play a large role in the markets going forward. 

Should the Fed get more aggressive in their language, and appear to want to head off inflation, the markets could take a pause and revalue equities on that assumption. If the Fed instead keeps the appearance of only raising rates in the absence of any data giving a reason to hold, then markets will feel the economy can expand without much interference from higher borrowing costs.

Source: CME Group

It will be important watch the Fed futures for June, which is slightly to the advantage of another rate hike, and the end of year overall projections. Should these tick towards more rate increases because of an aggressive fed it will no doubt introduce volatility and readjustment in the equity and currency market.