NEW YORK (Reuters) – The U.S. Federal Reserve raised interest rates on Wednesday, as expected, and left its monetary policy outlook for the coming years largely unchanged amid steady economic growth and a strong job market. In a policy statement that marked the end of the era of “accommodative” monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 percent to 2.25 percent. It still foresees another rate hike in December, three more next year, and one increase in 2020 “They took out ‘accommodative,’ but then they clustered more hikes around the median and they edged up their long term, so that’s a little bit hawkish. The question who focuses on what – you never know. “I found that the reactions post-the FOMC are important. And what the market seems to be doing to me is correct, which is the curve is flattening because the Fed is going to hike more than what’s priced into the forward. You might see equities wobble a bit here because I don’t think they got the joke that the Fed’s going to keep going and when that happens, they break something. “Additionally, the removal o the “accommodative” language on policy sent a somewhat hawkish message to financial markets—as this was offset by expectations for stronger growth in 2018 and 2019.
“It was also quite obvious, without them saying it, that they rejected President Trump’s request for them to stop raising interest rates which is their right as an independent Board as well as it is President Trump’s right, in my opinion, to express his reservations.
“One thing here seems clear to me. The government of the United States, as exemplified by the Jobs Cuts and Tax Bill, is trying to grow the economy while the Federal Reserve Bank, is actually trying to slow it down by raising rates, which increases the costs of both corporate and personal borrowing, as well as mortgage rates. “It is quite odd, in my view, that our elected government is going off in one direction while the nation’s central bank is headed off in the opposite direction. It seems that we are at an impasse here and I wonder just how long it can or will continue.”