Federal Reserve Increases Interest Rates by a Quarter Point

Seal of the United States Federal Reserve on a dollar bill. Flickr  Creative Commons  Kurtis Garbutt

But the Fed did not give many clues on future rate hikes in its statement, noting that the actual path of the federal funds rate will depend on the economic outlook and data.

Four years ago, then-Fed Chair Ben Bernanke triggered a bond selloff when he hinted at curtailing the Central Bank's bond-buying stimulus sooner than markets had expected.

Here's 4 things to know before the Fed's announcement Wednesday at 2 p.m. ET. "And, most importantly, no durable and significant acceleration of wage growth to healthy levels has happened yet".

But the bank said it would raise its late liquidity window lending rate by 75 basis points from 11 percent to 11.75 percent.

When inflation is expected to stay low, investors are drawn to Treasurys even if the interest they pay is low, because higher returns aren't needed to offset high inflation.

But America is no longer in crisis mode, and it can weather higher interest rates. The Fed first raised the benchmark interest rate it controls in December 2015, saying the economy was showing enough strength to justify slowly raising rates back above zero.

The rate is still low compared to the historical level, and reflects a still-accommodative monetary policy.

THAAD deployment not related to S. Korea's political situation
Beijing does not like any of its options vis-à-vis North Korea, but the world can not afford for China to remain complacent. The Chinese have threatened to essentially sever diplomatic ties with Seoul and have already pulled back on economic ties.

Oswald Poels expects another two to three rate hikes in 2017. The increase was expected by the market and is consistent with what Fed officials had been signaling. He pointed out the lenders often used higher funding costs as an excuse to raise mortgage rates.

The last dot plot came out in December and a new one publishes Wednesday.

"It's a reminder 2 percent is not a ceiling on inflation, it's a target", Yellen told a news conference after the rate decision was released.

Worldwide interest rates drive New Zealand's long-term rates, which have already started to move up.

Yellen said she "was introduced" to President Trump in a brief meeting recently. Look for more staunch defense of Dodd-Frank on Wednesday.

Dachrahn Wu (吳大任), director of National Central University's Research Center for Taiwan Economic Development, said that Taiwan's economic recovery has just kicked off, with momentum in exports, which account for about 60 percent of the country's gross domestic product (GDP), starting to pick up in the second half of a year ago. Trump will have the opportunity to appoint to all of those positions. The Fed, in our view, appears to be waiting for actual evidence that inflation is rising faster - or unemployment is falling further - than it thought before telling markets it is ready to normalize more quickly.

She also downplayed the possibility of conflict with the Trump administration.

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