The Fed raised its rates, now what?
(Note: all the sources listed in the “Balanced” section)
In December, 2018, the Federal Reserve raised its benchmark Federal Fund rates 0.25% to a targeted level of 2.25-2.50%. The increase marks the ninth time it’s raised rates since 2015 and the fourth time in 2018. The Fed took a slightly more dovish approach indicating that it now expects two additional rate hikes in 2019, down from three, and described a neutral level to be 2.8%, which is down from 3.0%.
Although the rate increase was largely expected, the Dow closed more than 350 points in the red after the afternoon announcement. The rate increase is being criticized by many political and economic pundits. So, is the Fed being overly cautious in raising rates, or are rate increases needed to prevent the economy from overheating?