Ministry of Money Announces Inflation Will Be Cured With a Bigger Number; Crowd Backs a Half-Point Hike Over the Quarter Point the Market Was Named After

Somebody opened an opinion market on Morfi called "Federal Reserve 25 bps hike this month odds", and the crowd has politely told the title it isn't ambitious enough. Before anyone could finish typing the words "quarter point", the front-runner became "Hike 50 bps": the view that if one rate rise is good medicine, two at once must be better. The Department of Arithmetic would like to confirm that this is how medicine works.

Here's the background. The Federal Reserve has already moved once. On September 16, the Federal Open Market Committee voted unanimously to raise its target range by a quarter point, to between three and three-quarters and four percent, saying inflation "remains elevated". That came after nine months of holding still. Then the September consumer price index arrived. NPR reports that prices rose three point seven percent from a year earlier, with core inflation at two point six. France 24 adds that the figure beat forecasts and that monthly inflation sped up from August.

Markets reacted the way markets do. According to France 24, analysts are split on whether the Fed will raise rates again at its meeting at the end of the month. CME Group's FedWatch tool moved the odds of another quarter-point rise to about a coin flip, up from roughly one in five a day earlier. In an October 8 speech, Governor Waller said inflation is too high and that policy will focus on it for at least the near term. That's about as close as a central banker gets to rolling up his sleeves.

The Morfi crowd skipped the coin flip and went bigger. "Hike 50 bps" leads with 27% consensus across 5 holders. "25 bps hike", the side the market was literally named after, trails at 26% consensus with 8 holders. Also on the ballot: 2 other sides. So far 13 unique traders have put $137,631 behind their opinions, and all of it happened in less than a day. Wall Street is still arguing over whether to take one small step. On Morfi, the leading camp wants to skip a stair.

In my opinion, the crowd hasn't gone far enough, so I offer a modest proposal. If a quarter point is timid and a half point is bold, the Fed should adopt the Continuous Hike Protocol. Under it, the rate goes up by a basis point every time a shopper gasps at a grocery receipt, and it is adjusted in real time by a network of sensors in the egg aisle. The Committee would no longer need to meet. It could simply be told the outcome, like the rest of us. Inflation would be beaten within weeks, mostly because nobody would be able to afford to buy anything. The Ministry of Money considers this a success and has already printed the commemorative coins at a slightly higher price.

What to watch: the Fed meeting at the end of the month, any more governors saying "too high" into a microphone, and whether the quarter-point camp can catch up before the doors close. The data comes from live opinion markets on Morfi, where people back their views with real money. The fight opened yesterday, so you can still join the market on Morfi and pick your side.