Market CommentariesThe Federal Reserve Raises Interest Rates At Its December 2017 FOMC

The Federal Reserve, which has become increasingly transparent in recent years, again lived up to its reputation, voting to raise interest rates following the conclusion of its two-day FOMC meeting, which adjourned at 2:00 PM (EST) this afternoon.

In its accompanying statement, the central bank noted that it would increase the federal funds rate from 1.25% to 1.50%. The bank had been expected to do just that. It maintained, as a rationale for this move, that the nation's economy was being pushed forward by a strengthening labor market and rising household spending.

At the same time, the Fed noted that inflation was still running below the Fed's 2% annual target, and that it would likely continue to do so in the year ahead. However, longer term, it said that it saw inflation finally stepping up. The Fed also said that while hurricane-related disruptions and rebuilding had affected economic activity in recent months, the economic outlook had not been altered materially.

In looking out to future rate action, the bank said, as per usual, that it would be affected by economic growth conditions and price inflation. Expectations are that conditions will warrant further gradual interest rate increases in the coming months. As before, we sense that the bank will vote for at least two, but more likely three, rate hikes in 2018.

That policy, meantime, should be sufficiently benign to keep the current long business expansion intact. Wall Street apparently agrees, as the Dow Jones Industrial Average is now boasting a 135-point gain on the day.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.