There is virtually a unanimous sentiment that the Fed will raise interest rates 0.25% at the conclusion of tomorrow’s Open Market Committee meeting, but it’s the tone of the statement that is now being debated. Some argue that the rate hike will be counterbalanced by a message of comfort and a plea for patience as they gradually increase the federal funds index. Others contend that the message will focus on a strong labor market setting the foundation for a string of hikes to return to economic normalcy–whatever that is.
Of course, interest rates move all the time without any Fed manipulation. The 10 year Treasury notes are up a full percentage point from just a few months ago. The rate hike tomorrow, should it happen, will be just the second one in the last decade. And so what really matters to the future of long term interest rates is not whether the Fed hikes tomorrow or not, but how it’s done. After all, it’s the thought that counts, right???