** 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.
IMHO, the Fed’s will raise rates and it will set the US apart from the rest of the Central Bankers around the world.
The US Dollar will rally in a huge way.
The bottom is about to drop out on the EUR/USD pair.