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Fed rate hikes will go higher, Elon Musk plans changes at Twitter and China is committed to Covid-Zero. Federal Reserve Chair Jerome Powell [View in browser]( [Bloomberg]( Fed rate hikes will go higher, Elon Musk plans changes at Twitter and China is committed to Covid-Zero. Fed hikes Federal Reserve Chair Jerome Powell left [little doubt]( that he is prepared to push rates as high as needed to stamp out inflation. The Fed raised rates by 75 basis points for the fourth time in a row, lifting its benchmark to a 3.75%-4% range, from nearly zero in March. Interest rates will go higher than earlier projected, Powell said, but [also signaled]( the path may soon involve smaller hikes. In the span of 90 minutes from when Powell started speaking to the US stock market close, the top 500 people on the [Bloomberg Billionaires Index]( lost about [$59 billion]( on their public holdings. Twitter takeover Elon Musk is making sweeping changes and ruffling feathers at Twitter. He plans to eliminate about [half of the company's workforce]( -- or 3,700 jobs -- in a bid to drive down costs, according to people with knowledge of the matter. He also aims to have the social media company start [selling blue verification badges]( for user profiles as soon as next week, a move that Musk floated and received backlash for. Meanwhile, Musk is backtracking on an initial plan to relax speech protections on Twitter and [committed to restoring]( content moderation tools in a Zoom call with the heads of some of the leading racial justice organizations in the US. Committed to Zero China’s top health body said the nation’s [zero-tolerance approach]( remains the overall strategy to fighting Covid-19 after unverified social media posts buoyed hopes the policy would be eased. This led to shares on the nation's companies snapping a [two-day rally]( that was built on reopening hopes. Still, the brief bullish turn shows how epic price moves will be if or when authorities in Beijing give a clear signal on ending their Covid-Zero policy -- making the situation [precarious for shorts](. Risk off Risk appetite [was sapped](after Powell said the Fed would raise interest rates more than previously anticipated. S&P 500 futures fell 0.3% as of 5:56 a.m. New York time after the cash gauge dropped 2.5% on Wednesday. European stocks also fell while global bond yields rose. The [pound dropped]( more than 1% ahead of the BOE decision on concern a smaller-than-expected hike could weaken the currency. The dollar gained as investors looked toward US jobs data, which may help to determine the pace of upcoming rate hikes. How will US midterm elections impact stocks and bonds? Fill out our MLIV Pulse [survey.]( Coming up… The BOE rate decision will be due at 8 a.m., followed by a press conference by Governor Andrew Bailey 30 minutes later. We'll also get initial jobless claims data at 8:30 a.m. At 10 a.m., figures for September factory orders and durable goods will be published, as well as October data for ISM's services gauge. Earnings include Starbucks, ConocoPhillips, Datadog, Warner Bros. Discovery, PayPal, Coinbase, DoorDash. What we’ve been reading Here’s what caught our eye over the past 24 hours: - [Bank of England](set for biggest rate rise in 33 years. - Biden asks voters to consider the[future of democracy.]( - [Blackstone’s]( $70 billion real estate fund losing steam. - [Climate bill](is a bigger deal than most realize. - [Credit Suisse’s](Saudi backer sheds $7 billion over stake deal. - Astros pitches [second no-hitter]( in World Series history. - Musk takes page out of [Zuckerberg’s](social media playbook. And finally, here’s what Joe is interested in this morning Yesterday's [Fed decision]( was interesting. When the actual announcement came out at 2 p.m., stocks rallied because there was some language in the statement that was kind of piv-ish. Then Powell delivered the press conference, and stocks got slammed. The line that caught people's attention in the statement was where the Fed said that the pace of hikes "will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” In other words, it was an acknowledgment that we've seen a very fast pace of rate increases this year, and that although inflation measures have yet to turn down, because monetary policy famously works with lags, the hikes we've seen already may still exert downward force on future price increases. But then in the press conference, Powell made clear they're more concerned about doing too little, than too much, when it comes to inflation and that the terminal rate (the ultimate rate peak) would likely be higher than what they expected at the September meeting. So "Slower Pace, Higher Destination" (as Citi economists Andrew Hollenhorst and Veronica Clark titled a note to clients) is the new narrative. Ok, with all that out of the way, there was an interesting question near the end of the press conference from [Nancy Marshall-Genzer]( at MarketWatch about whether the window for a "soft landing" has narrowed. Powell said that yes it has narrowed, due to the extraordinary tight labor market and the implication that has for how much they need to raise rates. That being said (and this is just my take), as long as the unemployment rate remains low the soft landing scenario (where inflation comes down without a surge in layoffs) can't entirely be ruled out. And so one way to make sense of that line in the statement about the monetary policy lags is that the Fed is creaking open the window of letting that soft landing scenario unfold. In other words, to some extent, we're revisiting the "transitory" debate (the debate will never go away) that started almost 18 months ago. There are almost certainly idiosyncratic or exogenous drivers of inflation (the war, supply chains, changes in consumption patterns) that will revert or normalize. And if those drivers are significant, then that normalization means (all else equal) less need for rate hikes. Obviously the Fed is in hiking mode and will be for some time. But two things: -- First, there really has been a very fast pace of hikes, from basically zero at the start of the year to an upper bound of 4% as of yesterday. It's possible that the full effects of the hikes (ex-housing) have yet to be felt. -- Second, an obvious lesson from this year is that nobody really knows when or where inflation is going to start decelerating. So with so much uncertainty on inflation itself, you have to take any terminal rate forecasts with a grain of salt. Powell can say that the terminal rate will probably be higher than what was estimated in September, but the Fed can't really know. The only thing we really know for sure is that the Fed is thinking about some step down in the pace of hikes which, per Powell, "may come as soon as the next meeting or the one after that." Then we'll see if ongoing normalization and the lagged effects of the rate hikes can do some of the heavy lifting and shift pressure away from the need for more tightening. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwartÂ]( Follow Us Like getting this newsletter? 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