The Fed spoke and Wall Street listened. Wednesday’s 0.75 percentage point, or 75 basis point, interest rate hike came with a dose of hawkish rhetoric from the central bank, prompting economists to raise their views on where rates are headed and what the cost of policy might be. picture. “We think that really underscores the likelihood of a recession over the next 12 months,” said Rob Dent, chief U.S. economist for Nomura in the Americas, after a meeting in which the Federal Reserve significantly raised its informal trajectory forecast. forward rates. “Fed Chairman Jerome Powell’s comments yesterday just support that view. Growth is going to slow and the Fed is going to stand there and say inflation is high enough, so we’re going to continue to tighten policy,” he said. Dent said the outcome of the meeting was largely in line with his firm’s expectations or that the central bank would likely raise its benchmark rate to a terminal range of 4.5% to 4.75% by 2023. However, other companies were somewhat taken aback. Markets retreated sharply on Wednesday and continued to drift lower on Thursday. “There’s going to be a point over the next few months that we’re going to think about when growth really starts to taper off,” Dent said. “The market is looking for the Fed to step back. The risk is that it won’t, and then you’ll see a sharper tightening of financial conditions.” Here’s a look at views elsewhere on the Street: JPMorgan Chase Call: The firm still expects the Fed to hike by 50 basis points in November, but raised its December outlook by another 50 basis points, moving its terminal forecast up 25 basis points. 4.5%. Comment: In a note titled “Bring the pain,” JPM’s chief U.S. economist Michael Feroli cited these impacts: “The new forecasts are not only hawkish, but somewhat more realistic, as they now recognize that at least some weakening of the labor market will be needed. get inflation down. Even so, it is still close to unblemished disinflation, as just a whiff of labor market weakness generates a very significant drop in inflation,” he wrote. Goldman Sachs call: A move of 75 basis points in November, 50 basis points in December and 25 basis points in February to a high of 4.5% – 4.75%, half a percentage point higher than previously expected. Comment: “The development of the funds rate in 2023 will depend primarily on two questions. The first is how quickly growth, hiring and inflation slow down…. The second is whether FOMC participants will actually be comfortable with a sufficiently high level of the funds rate and willing to slow or stop tightening while inflation remains uncomfortably high,” wrote economists Jan Hatzius and David Mericle. Bank of America call: 75 basis points in November, 50 in December, 25 each in February and March 2023. Final rate 4.75%-5% , or 75 basis points higher than the previous forecast. Comment: “Our baseline outlook for the U.S. economy continues to call for a contraction in the economy starting in the first half of 2023, including an increase in the unemployment rate to 5.0%,” BofA economist Michael Gapen wrote. “The Fed he thinks the real policy mistake is not restoring price stability and is willing to risk a recession to knock inflation back down to 2.0 percent.” Citigroup call: November to see 75 basis points, followed by 50 in December and 25 in February u, with the addition of a cumulative 25 basis points for a terminal rate of 4.5%-4.75%. Comment: “We expected the Fed to deliver a hawkish message via higher ‘dots’ and highlighted the upside risk to Fed interest rates,” wrote Citi economist Andrew Hollenhorst. “However, the Fed managed to exceed even our hawkish expectations.” Morgan Stanley’s call: November’s move of 75 basis points, up 25 points from the previous forecast, and the general call that the central bank will stay higher longer than the market expects. Comment: “While a fourth hike in November is not guaranteed, Chairman Powell’s tone today and our data forecasts make this our base case,” wrote chief U.S. economist Ellen Zentner. “The real economy’s response to higher rates has been muted so far, leading the Fed to move into a higher cap rate and a longer hiking cycle. We think persistent inflation will keep the Fed on top for much of next year, challenging market developments.” assumption of an earlier start to cuts.” Deutsche Bank The call: 75-point move in November, followed by another 50 in December. Follow the recession. Comment: “This short-term signal was reinforced by indications from Chairman Powell’s press conference and is consistent with our existing view,” wrote chief US economist Matthew Luzzetti. “More broadly, the committee’s hawkish signals were in line with our expectation of a near 5% final rate by early 2023 that would trigger a recession by mid-year.” Barclays call: 75 in November, followed by 25 in December, bringing the year-end funds rate to 4.25% – 4.5%. Both calls were 25 basis points higher than the previous call. Another 25 basis point increase in February, followed by a 50 basis point decrease “in the second half of the year”. Comment: “The picture that emerged from the meeting is one of a committee committed to moving aggressively amid persistent inflationary pressures from an economy that is fueled by a very resilient and robust labor market,” wrote economist Jonathan Millar. UBS call: 75 basis points in November, another 50 in December, with three cuts of 25 basis points later in 2023. Comment: “We expect the risks of a hard landing to increase,” wrote economist Jonathan Pingle. “We see it as a fairly restrictive policy. Next year, we expect inflation to move toward 2.0% more than the FOMC seems to be, and we expect a significant slowdown in the labor market.” — CNBC’s Michael Bloom contributed to this report.