Here’s what 8 banks are saying about the US Fed rate hike

But by 2017, he said, inflation should be on its way back to the Fed’s 2-percent goal.

The dollar also made slight gains against most other major currencies. Core inflation is expected to fall between 1.5% and 1.7%, compared with 1.7-2% a year ago.

“If Fed Chair Janet Yellen was ever to pull a rabbit out of the hat, now was the time to do it and she succeeded magnificently”, said Michael Ingram, market strategist at BGC Partners.

The guessing game that has dominated markets for more than a year finally ended yesterday when the U.S. raised interest rates for the first time in nearly a decade.

“The move is hardly a surprise”. Known as “liftoff”, the Fed’s action is expected to be the first of more rate increases that will probably come in 2016, CNN said.

Considering the muted outlook for inflation and oil prices, a strong dollar hurting USA manufacturers, and the continued fragile state of the global economy, the Fed may have to be cautious with future rate hikes. Policy makers’ projections “suggest four hikes next year, while markets are only pricing in two. The committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate”, it said.

And while Smith is largely optimistic, he does have some concerns that falling bond prices could spur investors to move their money out of corporate bond funds, causing some volatility in that market.

The first interest rate movement by the United States’ central bank, the Federal Reserve, in seven years is unlikely to impact the immediate future of interest rates in Australia.

“The rate hike also signals a stronger U.S. economy, which augurs well for demand pick-up globally and hence, for Indian exports of goods and services”. The rate hike was a long-expected vote of confidence in the US economy, which is the world’s biggest and a crucial market for exporters in trade-reliant Asia. Tells us where the direction of the economy is going.

After the rate hike, attention turned immediately to the likely timing of the next move.

There’s a greater than 50 percent probability that the Fed will lift rates again in June, with pricing rising over 90 percent only from the December 2016 meeting on, data compiled by Bloomberg show.