If we take that inflation data into account, and give a heavy weighting to market sentiment, we should expect the Fed to go forward with another 25 basis points on Wednesday.
They’ve clearly made an effort to set the expectation. The market has taken the “guidance.” So that becomes the path of least resistance.
But if the discussion in the post-meeting press conference is not about pausing, it will be a negative surprise for markets.
With the above in mind, the level of interest rates has proven to break things in the financial system.
A hike on Wednesday will take the level another step higher.
That said, by now we should know that the major central banks in the world have coordinated to normalize monetary policy — and have agreed, in coordination, to intervene, when necessary, to fix what they break.
And these interventions have a solid record of marking the bottom in stocks (and sentiment).