The Fed has a conflicting strategy for conflicting times

It was a difficult interest rate decision for Jerome Powell, but the Federal Reserve (Fed) chairman handled it surprisingly well. The challenge: He had to signal that the central bank could raise interest rates more slowly than before from December.

Investors had been asking for this for weeks. And the fact that the Fed is now complying could have triggered a rally on the stock markets. After all, this is the first clear sign that the central bank could soon be at the end of its ambitious program to tighten monetary policy.

And yet Powell has managed to quash a relief rally for now. Because the good news came with a clear warning: Although interest rates could rise more slowly, they could be higher than the around 4.5 percent that the central bankers had previously assumed. This, in turn, also increases the likelihood of a recession.