US Federal Reserve raises short term interest rates and raises 2017 expectations

For the second time in a decade the US Federal Reserve has raised interest rates by a quarter point from 0.25-0.5% up to 0.5-0.75%. This is in response to a strong year of growth for the US economy with near full employment and rising inflation expectations. As the Fed approach inflation and unemployment targets the expected path of rate rises for 2017 was increased to three quarter point hikes from the previous two. Global markets had largely priced in this move and have reacted cautiously to the news with the S&P coming off 0.8% and US government debt yields rising to 1.26%. The dollar rallied on the increased expectations of more rate rises in 2017. The European open remains cautious as markets look to the Bank of England who are set to announce near term interest rates.