Lindsey Group's Boockvar: Fed Will Revive QE if Stocks Drop 20 Percent

Ironically, the Federal Reserve's decision to end quantitative easing, announced Wednesday, may end up causing the Fed to revive the program later on, says Peter Boockvar, chief market analyst of The Lindsey Group.

That's because the completion of the Fed's new bond purchases, which totaled $85 billion a month last year, could send the stock market reeling, he told MarketWatch.

Already the tapering of those purchases, which began late last year, has caused a correction in equities, he said. For example, the Russell 2000 index of small stocks has slid 1.5 percent so far this year.

"QE has been most effective in inflating asset prices, and both the markets and economy are addicted to the stimulus," Boockvar said. "Without it, we will see a big adjustment. Our biggest worry is not what happens to markets, they obviously will correct, but what the Fed does next."

If stocks plunge 20 percent, the Fed will surely bring quantitative easing back, Boockvar predicted.

Meanwhile, the central bank adopted a more hawkish tone in its policy statement Wednesday, according to CNBC.

For example, the Fed said in its latest statement that "a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing."

By comparison, in its prior (September) statement, the Fed said, "a range of labor market indicators suggests that there remains significant underutilization of labor resources."

"I thought it was clearly a more hawkish tilt on the part of the Fed," Zane Brown, fixed income strategist at Lord Abbett, told CNBC. "The Fed did feel better about the economy and inflation going back up to 2 percent."

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• Greenspan: Fed Can't End Easing Without Causing Stock-Market Turmoil
• Euro Pacific's Schiff: Fed Will Reverse Tapering, Buoying Stocks