FXStreet (Delhi) – Research Team at Investec, notes that as widely trailed by committee members themselves, the FOMC increased the Fed Funds target range by +25bps to 0.25%-0.50% today. Key Quotes “This was the first rate increase since June 2006, but on consensus, in line with our forecast and largely priced into interest rate markets. In terms of voting patterns, there were no dissenters on the committee.” “The statement justified the decision stating that ‘with gradual adjustments in the stance of monetary policy’ growth would continue at a ‘moderate pace’ and labour market indicators would ‘continue to strengthen’. The committee stated that it was ‘reasonably confident’ that would rise to 2%, as transitory effects of falls in energy and import prices dissipate. The risks to this outlook were seen as balanced. Members stressed that the path of interest rates would depend on the economic outlook as ‘informed by the incoming data’.” “The economic projections were very close to those in September, the date of the previous projections. GDP growth is now seen to be in a range of 2.3%- 2.5% next year (from 2.2%-2.6%) and 2.0%-2.3% in 2017 (from 2.0%-2.4%). Unemployment was revised marginally downwards to 4.6%-4.8% in each of the next two years. The committee nudged down its estimate of the long-term or equilibrium jobless rate to 4.8%-5.0% from 4.9%-5.2%.” “In terms of the FOMC members’ Fed funds target projections (the so-called ‘dot plot’), these were also similar to September. By end-2016 the median member view is still at 1.4%, but 0.20% lower (compared with September’s plot) a year later at 2.4%. As we have remarked previously, the dot plot may be of limited use over likely Fed intentions, given that we do not know which belongs to Janet Yellen.” “Our own forecast for the funds rate, providing that the economy performs solidly, is that the FOMC will tighten by 75bps over 2016, taking the target range to 1.00%-1.25% at end-year. We expect the next hike to take place in March.” For more information, read our latest forex news.