WSJ Timiraos: The Fed decision likely be dependent on market response in coming days

WSJ Timiraos on CNBC:

• 25 basis point hike because skipping hike risks a market melt up
• the case for a pause boils down to concerns that credit events can turn serious and it's better to move slowly
• The Fed decision likely to be dependent on market response in coming days
• Everything we heard from the Fed is we have the tools to solve financial stability problems so we can keep our eyes on the prize of restoring price stability.

Yesterday, the ECB's Lagarde expressed a similar view that there are tools to solve financial stability, but inflation is their mandate.

We have to be cognizant that the Fed and the ECB talk. The ECB raised by 50 basis points, but you can argue that the ECB is behind the curve relative to the Fed. I would think that this is indeed likely to support 25 basis points.

The chance for a 25 basis point Basis point A basis point is a unit of measurement used to express the change in value of a financial instrument, such as a bond or a loan. One basis point is equal to 0.01%, or one one-hundredth of a percentage point. For example, if the interest rate on a bond increases from 5% to 5.25%, that is an increase of 25 basis points. It is often used in the context of interest rates, yield, and credit spreads. The short-hand for a basis point is bps and on a trading floor you will hear them referred to as ' A basis point is a unit of measurement used to express the change in value of a financial instrument, such as a bond or a loan. One basis point is equal to 0.01%, or one one-hundredth of a percentage point. For example, if the interest rate on a bond increases from 5% to 5.25%, that is an increase of 25 basis points. It is often used in the context of interest rates, yield, and credit spreads. The short-hand for a basis point is bps and on a trading floor you will hear them referred to as ' Read this Term hike is the odds on favorite at 71%, but what is vulnerable is the projection of rates down the road. The markets are pricing in a rate in January 2024 is at 3.95% with a terminal rate of 4.83%. That implies one more hike to 4.75% to 5%, and then a move down to 3.75% to 4% by the end of January (or down 1 bps). I am not thinking that is a stretch.

/inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term