Hawkish Fed Surprises Markets

Stocks weakened and bonds sold off Wednesday after the Fed surprised Wall Street with a slightly more hawkish tone that suggested it may be more aggressive with rate hikes than markets had expected.

Without surprise, the Fed ended its quantitative easing bond-buying program. But it also tweaked the language in its statement to show that it saw improvement in the economy, and it did not mention signs that it saw economic contagion.

Specifically, it said there has been “substantial improvement” in the jobs outlook and the underlying strength in the broader economy. It also said inflation has been held down by lower energy prices and other factors.


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