Market Commentary 16/3/2017
As predicted, the FOMC raised rates yesterday to 1.0%. Yellen was slightly dovish with response to the Q&A regarding the speed further rate increases will come this year. Of course, we know there will be further increases, it is just a matter of if there are only 2 or the 3 some analysts expect. Much of this will depend on if Trump is allowed to break the US debt ceiling and introduce his expansion plans.
Although he has signed the Executive orders he still needs to convince Congress and have them passed.
Below is yesterdays dot plot. (courtesy of the Feds website) which reflects the members of the FOMC expectations of rates for the future. As expected they continue to show rates will continue to increase over the next few years and return from the historic lows to closer to normality.
The key fear with these rate rises will be; as they have been low for some considerable time, will there be another credit bubble to burst as they increase!!