Fed finally lifts key interest rate from near zero

AP ^ | 12-165-2015 | MARTIN CRUTSINGER

[Dacula]

Raised interest rate by .25%

Rate now .50%

[Dacula]

Raised interest rate by .25%

Rate now .50%

[Cowboy Bob]

So, the Fed has doubled the interest rate!

[DCBryan1]

** FED RAISES INTEREST RATES 0.25 POINT IN UNANIMOUS VOTE
— SEES CONDITIONS WARRANTING `ONLY GRADUAL’ RATE INCREASES<— Dovish
— FORECASTS SIGNAL SAME 2016 RATE RISE PACE AS SEPT. OUTLOOK
— MEDIAN FED FUNDS RATE 2.4% END-2017 VS 2.6% SEPT. EST.
— MEDIAN FED FUNDS RATE 1.4% END-2016, UNCH VS SEPT. EST.
— MEDIAN 2016 PCE INFLATION OUTLOOK 1.6% VS 1.7% IN SEPT EST
— PCE INFLATION REACHES 2% GOAL IN 2018
— MEDIAN 2016 GDP GROWTH FORECAST 2.4% VS 2.3% IN SEPT EST.
— REINVESTMENT STAYS UNTIL NORMALIZATION `WELL UNDER WAY’
— statement change, “survey-based of longer-term inflation expectations have edged down.”
** As we rapidly look over all this we see little that should be a surprise; they hiked, we know why, and they’ll be gradual and data dependent. The slight, very slight, diminishment in distant dots and note on market measures of inflation expectations is perhaps slightly dovish but we’d make no big deal about it.
** Well, the market seems to generally concur — yields are a bit higher with long end outperforming, 2s up against 1%. As we wrote if this is the knee-jerk response it’s hardly much. For what it’s worth June Fed Fund Futures were 52 bp before and remain at 52 bp.

[blackdog]

They are giving Hillary some place to go when her liberal garbage fashion of governing goes bad.

[amorphous]

"US INTEREST RATE DOUBLED!!!"

;-)

[PGR88]

So much hype and hand-wringing over 1/4 of one percentage point?

Our monetary system is as now as centrally planned and socialized as the soviet wheat harvest was. This months-long debate over what the mandarins at the Fed will do proves this

[Little Pig]

I left my HP-12c in my other coat. What does this do to Federal Debt payments?

[Starstruck]

Whoa. Now I'll be able to move my money out of stocks and live on interest.

[Nervous Tick]

>> What does this do to Federal Debt payments?

I’m going to go out on a limb and predict that federal debt service payments will increase.

[ozarkgirl]

So, the Fed has doubled the interest rate!

Judging from that comment, I'm guessing you work in media in some manner.

[grania]

In the decade since the interest rates have gone from dismal to near 0%:

The middle class has shrunk so much it is no longer a majority of US households

The stock market is at heights that are great for the investor class but oblivious to the situation of a majority of US citizens

All that "quantitative easing" has the gov spending like it's make-believe money

Manufacturing hasn't grown at all, let alone keep pace with the bogus money that's propped up the stock market

Banks and the CEO class have benefitted beyond comprehension

---------

It isn't rocket science. People can't get ahead by saving for future needs if we don't collect interest on our savings. The worst enemies of the US couldn't do more to destroy the traditional US economy than the Federal Reserve has, even if they tried.

[ozarkgirl]

I think investors are okay with .25 pt.

Stock market dived right before the announcement (went in the negative) but then recovered right after.

.25% gutsy move on yellen’s part (not) but I guess it’s ok. Something is better than nothing. They’ve been threatening for weeks/months.

[Cowboy Bob]

Actually, I have an MBA, and my concentration was in Economics.

But, I did stay at a Holiday Inn last night!

[Nervous Tick]

>> my concentration was in Economics.

My concentration was elsewhere.

Which probably explains my Economics grade.

[Little Pig]

I know they’ll increase. The question is, by how much. The elephant in the room when talking about the rate increase is what the net effect on the debt payments is. If the rate goes up enough, it does ugly things to the overall interest charge, and subsequently has a significant impact on the budget and the viability of the government overall. So, was this increase small enough that the proverbial can could be kicked just a bit farther down the road, or have we finally run definitively out of road?

[blackdog]

Interest rates below 5% are designed to force investment / extortion of your Sallie and Joe citizen's hard earned wages into the 401K and IRA system, which of course are really investment banks and brokerage firms.

It also shifts / eliminates greatly the exposure of the FDIC system.

The devil is really in the details.

[Cowboy Bob]

I’ve always loved Economics. But I was disappointed to learn that my son hates it (he has to take a course in school this year). But, last night he started telling me about the price of crude oil (the current Brent price), and talking about it’s effect on the ruble/dollar exchange rate. It made me a happy father...

[ChildOfThe60s]

Headline:

First Time in 40 Years Interest rates DOUBLED Overnight!
(Women and minorities to be hardest hit)

[Leaning Right]

So much hype and hand-wringing over 1/4 of one percentage point?

Depends on your where you're standing. I made a rather sizable bet with a friend over this. I bet that the Fed would not raise rates. Now I've got to pay off. So for me, this is huge and serious!

[Vigilanteman]

Yep. All you will need is eight million dollars to generate an income of $40,000 per year.