Fed funds rate rises from zero for the first time in six years

  • Fed funds rate rises to range of 0.25% to 0.50%

Highlights:

  • Sees conditions warranting 'only gradual' rate increases
  • Fed Fed funds rate was 1.4% at end-2016, unchanged vs Sept forecast
  • Vote was unanimous
  • Anticipates keep existing policy of reinvesting QE until normalization 'well under way'
  • Labor indicators confirm underutilization of lab resources has diminished appreciably since early 2015
  • Inflation is expected to rise to 2% over medium term
  • Fed reasonably confident inflation to rise over medium term
  • When determining time, size of future chances in rates, it will assess realized and expected coditions relative to employment and inflation objectives

The unanimous vote strikes me as a touch hawkish. The emphasis on gradual is on the dovish side but expected. The decider for me is the projection. They've left the central forecast at 1.4% at the end of next year. That's four hikes and if they really wanted to calm nerves, they would have scaled that back. So that's why I come down on the hawkish side.

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