There is so much leverage in the economy that an abrupt shift towards anything approaching Volker-level rates would mean a catastrophic level of defaults in all sectors. By keeping rates so low for so long what they've really done is paint themselves into a corner.
The best case I see is that they raise rates by 1-2 pct and accept a few years of elevated inflation followed by a gradual normalization towards a long term mean. I really don't believe hyperinflation is a big risk.
There was an abrupt shift in the bond market already. BND fell by 8% this year, which is a terrible 3.5 month return for an intermediate bond fund (prices move inversely to market interest rates). Corporate bond funds have fallen even more.
The market is pricing in a 87% chance the next hike is 50 bps, and a roughly 95% chance of the rate being at least 2.25-2.5% by the end of the year.
https://www.cmegroup.com/trading/interest-rates/countdown-to...
The market isnt always right, and even a series of back to back 50 bp hikes might not be enough. We'll see.