BNP Paribas: Fed hike unlikely to start new tightening cycle like 2022-2023

The distinction between a fresh tightening cycle and a corrective, preventive move matters for how markets price the policy path: a repeat of 2022-2023 implies a sustained repricing of duration and risk assets, while a limited reversal of prior cuts suggests a shorter, more contained adjustment. Lo's stagflation warning also flags the tension the Fed faces if inflation stays sticky while growth cools. Whether the Fed itself frames any hike as preventive rather than the start of a broader campaign is the key signal to watch.