By Liz Moyer
Investing.com -- Stocks turned lower after the Federal Reserve's policy decision was released, indicating interest rates will go higher than expected and stay there longer.
The Fed sees its policy rate rising to 5.1%, which is higher than it previously forecast, as it tries to tame inflation, though now expectations are for smaller rate hikes at upcoming meetings. Today's half-percentage point increase was widely expected.
The Fed's outlook for next year sees higher rates alongside continued inflation and weakening economic conditions. Officials foresee gross domestic product at 0.5% in 2023, which is lower than the 1.2% forecast in September. They also see unemployment rising to 4.6% next year. It's around 3.7% now.
The gloomier outlook comes amid recent economic data that shows inflation cooling, though the Fed still sees work ahead of it.
Chair Jerome Powell quashed expectations that had the Fed pausing rate increases or even cutting rates next year, saying the focus is on getting inflation back to its 2% target. "We think that we'll have to maintain a restrictive stance of policy for some time," he told reporters.
Here are three things that could affect markets tomorrow:
1. Retail sales
Retail sales for November are expected out at 8:30 ET (13:30 GMT). Analysts expect them to fall 0.1% from October after rising 1.3% the prior month, despite a strong day for Black Friday sales at Thanksgiving time.
2. Jobless claims
One of the Fed's key metrics for deciding on interest rates has been unemployment. The next jobless claims report is due out at 8:30 ET. Analysts are expecting new claims of 230,000 for last week, the same as the previous week.
3. Industrial production
The industrial production yardstick for November is due out at 9:15 ET. Analysts expect a gain of 0.1% for the month compared to a 0.1% drop the prior month.