“Markets would hate it. Just a couple of days ago we were debating whether 50 or 75 would be sufficient,” he said. “100 bp would be perceived as a panic move.”
Andrew Lekas, head of FICC trading at Old Mission Capital:
“Oddly enough, I think the market might rally,” he said. “They want to see the Fed take things seriously on the inflation front, and the sooner we get to the end of these hikes the better.”
“The knee-jerk reaction is probably lower in all risk assets, and there’s the obvious funding impact on anyone who is using leverage, but for the medium term health of the market I think 100 might make sense.”
Steven Englander, head of Group-of-10 currency research at Standard Charter:
“If you are on the FOMC and believe that the market needs shock and awe to lower inflation expectations, then maybe you argue for 100bps. I think it’s more sensible for the FOMC to say ‘we can keep raising rates as far as we have to but don’t have to do it at once.’”
Ian Shepherdson, chief economist at Pantheon Macroeconomics:
“Eleven Fed officials have made it very clear that they will not slow the pace of rate hikes until they see convincing evidence that core inflation pressure is easing on a sequential basis. These data mean that the chance of a 50bp hike next week has gone,” he said. “But the 20% chance of a 100bp hike now priced-in looks over the top.”
Kate Moore, BlackRock Head of Thematic Strategy for Global Allocation:
“We haven’t changed our call (75bp) but I think it’s really wise to adjust expectations around the forward path especially to the year end,” she said. “The fact that 100bps is starting to get somewhat priced into the market, it’s a bit destabilizing for the equity market.”