OK, the rate hike that's been widely anticipated is finally behind us. The FOMC raised rates by a quarter of a percentage point and the markets went nuts for a while. It was amazing to see the machines take $500 billion-plus companies up and down in a blink of an eye.
Fed Chair Janet Yellen basically said that the rate hike should be taken as a sign of confidence in the growth of the economy. She also added that the slack in the labor market has diminished so, according to her, fiscal policy is not necessary to bring about full employment. I think she might be on the right track there but fiscal spending can create a whole lot of higher-level/better-paying jobs than have been created thus far.
The Fed Chair also said that she will not offer the incoming president advice on how to do policy. Like Trump would be open to that advice in the first place? It seems to me the president-elect has his own views on how he plans to go about running the ship, so to speak. One thing she did clarify is that the Fed staff has been in touch with the Trump transition team, which is a good thing anyway one looks at it.
Yellen is playing it smart by saying that the Fed will stay focused on monetary policy, which obviously is the central bank's mandate. That's the way it should be no matter who is in the White House.
Final point, do yourselves a huge favor and do not buy into the spin that the "dot plot" showing three anticipated rate hikes for 2017 is bearish and suggesting that investors head for the hills. That is absolutely not true.
As I said in my preview yesterday, the dot plot offers an insight into the collective thinking of the FOMC at a particular point in time. That can, and more than likely will, change as the economic data and the new administration's policies become more clear to the rest of the world.