Fed raises rates by quarter point

On Wednesday afternoon, Fed Chairman Jerome Powell confirmed that his Fed remains independent of the White House. On Monday, President Donald Trump berated the Fed for even considering raising rates. Yet that’s exactly what Powell and the Federal Open Market Committee voted to do at today's monetary policy meeting. The stock market fell on the news. 

The U.S. Federal Reserve lifted short-term interest rates by a quarter percentage point, pushing up costs for everything from credit cards to adjustable-rate mortgages. But the central bank also suggested a slower pace of tightening next year, with two rate increases instead of the three investors had been expecting. Wednesday's increase sets the target for the benchmark federal-funds rate at 2.25% to 2.50%.

Interestingly, the 10-year Treasury bond yield fell, signaling that the Bond Vigilantes are leaving it to the Dow Vigilantes to punish the Fed for its Grinch-like decision. In my opinion, by proceeding with today's rate hike and suggesting that two more are on the way for 2019, the odds that there will be no rate hikes in 2019 have increased. That’s confirmed by the reaction in the bond market. 

It's the ninth move higher since 2015, and the fourth this year, as economic growth and inflation pick up.  

The Fed is forecasting 2 more rate increases in 2019.