Santoli: Here's why the Fed is suddenly hawkish

Share
Getty Images

Investors are unnerved and perplexed by the Federal Reserve's insistence that it might well lift interest rates this summer, and perhaps make two or three moves by year's end.

And this uneasy confusion is exactly the response the Fed is looking for.

Aside from the formal goals of fostering full employment and moderate inflation, Fed officials seek to promote "financial stability." This means they don't want markets to grow so comfortable in their outlook for minimal interest rates and a forgiving Fed that risk-taking behavior runs out of control, producing bubbly excesses that can lead to future problems.

So when the bond market a few months ago began pricing out the chance of rate hikes for nearly all of 2016, Fed voices rose in near unison to convince the market that this view didn't match their intentions.

But what are these pockets of financial-market recklessness that Janet Yellen and colleagues are looking to restrain?


More In Pro News and Analysis

CNBC ProAstraZeneca and more: BofA just picked its top Europe stocks for the next decade
CNBC ProMike Santoli’s market notes: Stocks taking a breather, Apple is up as the market rebalances
CNBC ProApple's use of lidar is a sign of the 3D sensing boom to come. How to play it