- The Fed is getting off the "hamster wheel" of 75 basis point rate hikes, Scott Minerd said.
- But the Guggenheim CIO added the Fed is sticking to its interest rate rise goals to cool inflation.
The Federal Reserve is sticking to its interest rate goals but is getting off the "hamster wheel" of jumbo rate hikes, Guggenheim CIO Scott Minerd said.
In a Wednesday interview with Bloomberg, he referred to the Fed's articulation about more rate rises after the US central bank said it will take into account the "cumulative tightening of monetary policy" in determining future increases.
In Minerd's view, that means the Fed will continue raising to get inflation down to its 2% target, but move away from 75 basis point increases.
"I think it's a very artful way of the Fed getting off the hamster wheel of 75 basis points a meeting and not having the focus so much on what is the rate change at the next meeting, and what is the pace, but to say, 'hey guys, we're going to do what we have to over whatever period of time to get us to something that brings inflation down," Minerd said.
The Federal Reserve raised interest rates by another 0.75 percentage points at its Wednesday meeting in its fourth consecutive hike of that scale in a bid to tame inflation that stood at 8.2% through September.
The latest increase brings the fed funds rate between 3.75% and 4%, the highest since 2008.
The Fed's message also suggested it will soften the pace of future rises by taking into account the cumulative tightening of monetary policy, referring to the overall effect of interest rate hikes with respect to lag times. That sparked speculation about a Fed pivot to start cutting, rather than raising, rates.
"I think the slowing of tightening is not an easing," Minerd stressed, but had opened the door to a Fed pivot.
He tweeted: "I wouldn't call today's #FOMC decision/statement a pivot, but by acknowledging the need to wait for the lagged effects of 'cumulative tightening,' the Fed has opened the door to it. But they will still have to see it in the data."