As most people expecting a 25-basis point rate raise from the Feds, Bloomberg TV recently spoke with Axonic Capital Director of Research Peter Cecchini for further insight on what might occur at the upcoming Fed meeting and the potential for another rate hike.
“If the Fed really wanted to accomplish what it said it wants to, then it would do 50. I think this is a pivotal meeting. I don’t think they will do 50. I don’t think they have that kind of resolve,” states Cecchini.
There has been an extreme tightening of financial conditions in response from some of the worst inflation we’ve seen in a while. Cecchini believes that it is prudent to slow the pace of hikes. “What I think investors are missing is this long, invariable lag effect. The economy will see it this year and the Fed will not react the way it usually does,” he explains.
Cecchini also believes oil prices have made a big difference to the inflation story, especially with the current geopolitical environment.
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