One strong argument for the Fed hiking 75bps today is that the average US household is starting to expect higher inflation to become a permanent feature of the US economy, see chart below. In other words, inflation expectations are becoming entrenched among workers, households, and businesses.
This has significant negative implications for the planning of CapEx spending and consumer spending. As a result, the Fed wants to reduce long-term inflation expectations as quickly as possible. The only way to do that is to show a strong commitment to getting inflation down by tightening financial conditions further through higher short and long rates, wider credit spreads, and lower equities.
From a strategy perspective, if we get 75bps today, it could trigger a rally in credit and equities after the meeting because it would signal that the Fed is committed to getting the inflation problem under control.
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