Markets may be in for an 'enormous shock' as the Fed could have to kick up interest rates to a 40-year high to fight inflation, strategist says

• The markets may be in for a major shock as the Fed drives rates up to unforeseen highs to fight inflation. 
• That's according to Dominique Dwor-Frecaut, who told Bloomberg disinflation is "sadly fiction."
• Inflationary pressures are starting to stabilize and that could lead to even higher borrowing rates. 

Disinflation is a "fiction," and US monetary policymakers may need to nearly double borrowing rates from current levels to tamp down hot inflation, a move that would rock markets, according to a strategist at financial research firm Macro Hive. 

The Federal Reserve may find itself driving up the key Fed funds rate to 8%, says Dominique Dwor-Frecaut, senior macro strategist at Macro Hive. An 8% rate is much higher than the current range of 4.5%-4.75%, and it hasn't been that high since 1985.