Fed Hikes Rates--12/13/2017

Just a few moments ago, the Fed announced they hiked short-term rates by another 1/4 point.  The benchmark short-term rate now stands at 1.5%.

What I find fascinating, odd, and down right weird is the Fed's forecast in relation to this move.  You see, Central Banks hike rates to slow an economy down.  The general idea is that the Bankers see an economy that is going to overheat, so they hike rates to put the brakes on things to slow growth and contain inflation.

Well, the Fed did just hike rates, as mentioned above, and held true to their forecast for 3 more expected rate hikes next year.  HOWEVER, the Fed forecasts GDP growth of 2.5% for 2018, 2.1% for 2019, and 2.0% for 2020.  Furthermore, they expect inflation to be only 1.7% next year.

So, there is no growth or inflation in their forecasts...but they've decided to raise rates. 

Why?

 

https://www.cnbc.com/2017/12/13/fed-hikes-rates-by-a-quarter-point.html