It took a while to sink in after last week, but investors had a full freak-out from Friday through Monday when they realized just how serious the Federal Reserve is about fighting inflation.

As a result, stocks have posted their worst start to the year since 1939, with the S&P 500 falling over 16%.

What changed?

In short, last week was the end of the “free money” era of central banking. Since the beginning of the pandemic, the Fed had supported markets with ultra-accommodative monetary policy in the form of near-zero interest rates and quantitative easing (QE). Stocks thrived under these loose monetary policies. As long as the central bank was injecting liquidity into the economy as an emergency lending measure, the safety net was laid out for investors chasing all kinds of risk assets.

But starting in March, when the Fed raised its benchmark interest rate for the first time since 2018 to tackle inflation, that all changed. The move, which was followed by another half-point rate hike on Wednesday, signaled the end of the free money era.

Markets are now experiencing what Wall Street watchers call a “regime change,” and understanding how far stocks might fall as a result requires understanding how markets price in a lack of Fed support moving forward.