Barron's - The Days of Giant Rate Hikes Are ‘Surely Past’.

As inflation drops, markets seem to be turning a blind eye to the Fed’s messaging, says Jan Szilagyi, CEO of Toggle AI. Most fed watchers are now betting that the Fed tops rates at 5% or under, according to the CME CME –1.03% FedWatch Tool. That’s a problem for the central bank.

“If the Fed is saying I’m going to hike by 5% but the market isn’t looking to price that in, then in some sense your policy isn’t as tight as you want it to be,” Szilagyi says.

Bond yields won’t rise as much as the central bank would want them to, meaning the Fed will need to tighten for longer and more aggressively until they start ticking up, he added.

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