The market is diving off the news that the Fed has not only raised the Fed funds rate to 5%, but might do more
The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.
The previous paragraph has a lot of toing and froing of "inflation is under control/inflation might still need to be controlled". Compare this statement to the previous FOMC statement
when we went to 4.75%, and you have a good deal of uncertainty about language.
The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.
In one case they've said the inflation risks are not there, but in the same sentence they've omitted any statement about sustainable economic growth. The current statement says:
Economic growth has been quite strong so far this year. The Committee sees growth as likely to moderate to a more sustainable pace, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.
As I said last week, I'm still inclined to think we are going to 5.25%. David Altig
reads the futures market as saying no, but I'm going out on a limb to say they'll reverse that judgment very soon.