Stocks, already higher on the day, initially rose some more following the Fed meeting. This might not have been a case so much of “buy the news” as “the news could have been worse.”

Heading into the meeting, there were worries that maybe, just maybe, the Fed would opt to end its asset purchases right away, or signal that it would raise rates by a half-point in March. Indeed, ahead of the statement, federal funds futures implied that investors forecast there was about a 5% possibility of a rate hike on Wednesday. That might have been just an outside chance, but it can be nice to see outside chances of something unpleasant dwindle to zero.

But when Fed Chairman

Jerome Powell

began his press conference, the market quickly took a turn for the worse. Asked about what the pace of rate increases might be, he said the central bank would need to be “nimble.” This appeared to be an indication that rather than raising rates every other meeting—the course the Fed policy makers seemed to have set for themselves—rate increases could come in quicker order. Indeed, the odds of the policy makers raising rates by three-quarters of a point by their June meeting, or by a quarter point at each of their next three meetings, rose from about 45% to about 60%.

What was remarkable about Mr. Powell’s relative lack of caution is that the world has lately been giving the Fed ample reason to drag its feet a bit. The rise in Covid-19 cases driven by the Omicron variant may quickly pass, but it has quite clearly hurt the economy, reducing spending and pulling people out of work. On top of that, Russia might soon attack Ukraine. And equity markets have fallen out of bed this year—especially tech stocks—partly on worries that a Fed tightening cycle might end badly for the economy.

Of course any of those things might lead the Fed to rethink matters. The economic data could take a worse-than-expected turn, for example, or stocks could fall really significantly from where they are now. But in the absence of anything really adverse happening, the Fed seems likely to raise rates at least three times in a row.

And if inflation has started to settle down by the summer, or the rebound in the economy post-Omicron is especially strong, or if hiring strains continue to worsen, the Fed could keep on hiking. The Fed has provided the economy with a huge amount of support since the pandemic struck. Now investors have to figure out what will happen as the proverbial punch bowl is yanked away.

Write to Justin Lahart at justin.lahart@wsj.com