Scotia: If Fed Hikes 75, Their One-Meeting Fwd Guidance Becomes Useless

Scotiabank now sees a 75bp Fed hike this week, though excoriates the FOMC's communication on the matter.

• "The case for accelerating the size of hikes outweighs the case against", though "if they do indeed hike by 75bps tomorrow, then even their one-meeting ahead forward guidance will become utterly useless."
• On the Fed's new optics problem now that it's signaled 75bp via the press: "It would no longer surprise markets given that it’s fully priced and so the fear of sparking market turmoil has already come and gone. By corollary, not going 75bps would risk awkward optics around easing financial conditions with inflation ripping and after a jobs beat unless they really hit forward guidance much harder than is already priced which is tough to see given we have 3½ – 3¾% priced for year-end now. In other words, if they pass on 75 and don’t go to 3¾% by year-end then headlines on dovish market reactions relative to what’s priced would be super awkward optics for them".