403(b) Curriculum Library

Cammack Retirement Investment Brief: No Surprises from the Fed

The Federal Reserve concluded its final policy meeting of the year and as expected, raised the benchmark interest rate 25 basis points to a range of 0.50% to 0.75%.  Bond yields have moved sharply higher in recent weeks in anticipation of the Fed’s announcement.

Fed officials also signaled a slightly more aggressive monetary policy stance, expecting three or more rate hikes in 2017. The median federal funds rate is now forecasted to be 1.375% by year-end.  In September, they expected to raise interest rates two times in 2017. While Fed officials have modestly increased their rate expectations for next year, their economic projections for growth, inflation and the labor market are largely unchanged. 

In the press conference that followed the meeting, Chairwomen Yellen stated that Fed officials are operating under a cloud of uncertainty with regard to how President-Elect Trump’s proposed policy initiatives will impact the economy.  While the markets are clearly anticipating stronger growth and higher inflation under the new administration, Fed officials have not fully factored this into their forecasts, opting to take a more cautious, wait-and-see approach.

After the announcement, equity prices moved lower, bond yields increased and the U.S. dollar strengthened. 

Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.

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