From the Wall Street Journal's Real Time Economics blog:
The Federal Open Market Committee on Wednesday said it would move to raise interest rates by a quarter percentage point, lifting them from near zero for the first time since the recession. Fed officials said economic activity “has been expanding at a moderate pace,” pointing to “solid” household spending and business investment and diminished slack in the labor market this year. Officials emphasized, however, rate increases would proceed gradually. The move was widely expected by economists and markets. Here are comments from economists on Wednesday’s announcement:
“The rate rise has been overhyped and won’t have a big impact on the U.S. economy.Monetary policy is still extraordinarily accommodative. The absence of an economic shock or financial turbulence [following] the rate rise will restore some confidence that has ebbed as markets have waited for months for the Fed to move.” —Joseph Lake, Economist Intelligence Unit
“In the end, the pace [of future rate increases] will be determined by the data and financial markets developments. We remain skeptical that the pace will be as gradual as is being suggested, mainly because we expect the unemployment rate to keep falling, eventually leading to more upward pressure on inflation. For now, though, it makes sense for officials to be as reassuring for markets as they can without compromising their flexibility later.” —Jim O’Sullivan, High Frequency Economics
“The deed is done and the Fed has delivered to us all a wonderful holiday gift—something new to write and talk about: When is the next hike?.…Reading from the minutes and the dot plots, the Fed’s plan is for the funds rate to rise to the inflation rate by year-end 2016 and then modestly pull ahead by year end 2017 and then move to a 1.5% real rate by year end 2018. Ah, the sweet world of econometric model outcomes. All of this is, of course, contingent on core inflation rising in 2016 towards their target and, first and foremost, that progress continues for the labor market.” —Steve Blitz, ITG Investment Research...MUCH MORE