So, if the FOMC raised the policy rate by 25-basis points and the market expected a 10-basis point hike (meaning the market pricing reflected a 40 percent probability of a 25 basis point hike and 60 percent probability of no change) this would correspond to a policy surprise of 15 basis points.
Financial market participants were already unsettled by recent global events. Had the failure of LTCM triggered the seizing up of markets, substantial damage could have been inflicted on many market participants, including some not directly involved with the firm, and could have potentially impaired the economies of many nations, including our own.