Interesting move given unemployment is still high and inflation below target…

http://www.theguardian.com/business/2015/dec/16/federal-reserve-us-interest-rate-rise-fed-funds-janet-yellen

They’ve been pushing the rate rise back month after month. Many thought it would be as soon as June.

US recovery has been a lot more vibrant than in the UK and the EU still sick, a US rate rise is overdue. My 2 cents.

Stealing less, good….

As per jambalaya it’s a positive sign that the US economy is fairly strong, the uncertainty of when it will happen has rumbled on too long.

Forward guidance is also a good thing, and the fed has said it will slowly rise up to around 3.5%.

Positive for the US, interesting for all those that the US owns the debt for such as a bunch in SE Asia, their bills just went up.

How long until QE starts again?

Positive for the US

That is TBD, it might knock growth back a bit as exports will be more expensive…

But the other side is stronger $ so imports cheaper, good for global growth (China, India etc).

Rates are still so low and things need to return to some sort of norm, plus it will be a slow rise to a still low level.

And more importantly send a gentle reminder to those in debt to sort your situation out because rates are on the increase. A little nudge up to test the market and start to wean individuals off free money is probably a good thing.

I was reading the financial press a few weeks ago and someone made a comment that it was scary that the last time the fed rate (and BOE rate) changed, a vast number of currency traders were still in school! 😯

They also made a point that with the fed raising rates at the same time as the eurozone is employing QE it could raise a perfect storm in the currency market such as happened in 92 when the UK was forced out of the ERM