BNP Paribas SA strategist Chi Lo said the Fed is unlikely to embark on a full tightening cycle like 2022-23 even if markets price two more hikes. A September increase would more likely be a 'pre-emptive rate hike' to reverse last year’s three cuts and help pull inflation back toward target. He added further hikes would not neutralize external shocks such as war-driven or energy-price inflation but would shore up the Fed’s anti-inflation credibility and ease market concerns; however, additional t

BNP Paribas SA strategist Chi Lo said the Fed is unlikely to embark on a full tightening cycle like 2022-23 even if markets price two more hikes. A September increase would more likely be a 'pre-emptive rate hike' to reverse last year’s three cuts and help pull inflation back toward target. He added further hikes would not neutralize external shocks such as war-driven or energy-price inflation but would shore up the Fed’s anti-inflation credibility and ease market concerns; however, additional tightening could slow other parts of the economy and risk tipping growth into stagflation.