The Fed won't care about stocks selling off until there's a panic, because it's hell-bent on getting inflation under control, says Guggenheim's Scott Minerd
- The Fed won't intervene to stop stocks falling until panic erupts, Scott Minerd told CNBC.
- "As long as the sell-off is orderly, they are not concerned with the level of stock prices," he said.
The Fed won't worry about stocks falling until panic floods the markets, as it's focused on controlling inflation, Guggenheim's Scott Minerd said.
Speaking to CNBC Tuesday, Minerd said: "As long as the sell-off is orderly, [the Fed] are not concerned with the level of stock prices."
"The bottom line is until we see some amount of panic here or something that gets the central bankers concerned, they are just hell-bent to get inflation under control," he added.
Minerd was discussing the likelihood of a so-called "Fed put" materializing — the point at which the Fed comes to the stock market's rescue. However, Fed Chair Jerome Powell and his colleagues have shown no signs of intervening despite stocks dropping significantly in recent weeks.
The Fed has signaled it will continue raising interest rates until inflation cools down. The Consumer Price Index rose by 8.6% in the year to May - the inflation benchmark's fastest rate of increase since December 1981. The central bank responded with its first 0.75-basis-point hike since 1996.
Prices have soared partly due to sanctions against Russian crude over its war with Ukraine, which have heaped pressure on global energy supplies.
The worrying economic outlook has weighed on US stocks. The S&P 500 recently tipped into a bear market after falling more than 20% from its January high, as the prospect of further rate hikes has left investors anxious about an imminent economic recession.
Morgan Stanley has warned that stocks are likely to fall another 10% before reaching a bottom, and cautioned a recession has become significantly more likely.
Meanwhile, Powell has said the Fed isn't trying to cause a recession, but it is certainly a possibility. The central banker did try to calm investors by vowing to fight inflation, stressing his commitment to the job is "unconditional."
But according to Minerd, instability in the global stock market is unlikely to sway the Fed until things escalate out of control. "The Fed and the central banks are going to press on this until they break something," he said.