The higher rate helped strengthen the dollar and weaken gold prices as other central banks also are expected to hike rates this week. But a rally this time is unlikely when policymakers conclude a two-day meeting on Wednesday, he said. Markets also indicate a real chance that rates could hit 4.5% as the Fed is forced to tip the economy into a recession to subdue inflation. "Asset performance during this Fed tightening cycle is very different from the norm for other rate hike episodes," said David Chao, a global market strategist at Invesco. read moreChina's central bank went its own way though, and cut a repo rate by 10 basis points to support its ailing economy.

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