“Restoring price stability is essential to set the stage for achieving maximum employment and stable prices in the longer run. The historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”- Jerome Powell, November 2nd, 2022.
On June 10th this year, the US CPI data came out at 8.6%, the highest since 1981, sending shockwaves across the markets worldwide.
Within a span of a few hours, the bond markets spooked by the hot numbers forced the terminal rate higher, and the probability of the first ever 75 bps hike crossed more than 85%.
On June 15th, the Fed obliged the markets and raised the rates by 75 bps. Since then, the markets have dictated to the Fed what to do and compelled the Fed to frontload the enormous rate hikes.
Nonetheless, the tug-of-war between the Fed and markets reached a climax this Wednesday when the Fed…
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