FXStreet (Mumbai) - At its December 15-16 meeting the US Federal Reserve decided to end its zero interest rate regime that was held steady for almost a decade. The Fed finally raised increased the Fed funds target range by +25bps to 0.25%-0.5%. Fed chair Yellen declared that the pace of subsequent rate hike would be gradual and dependent on incoming economic data. Yellen, at the post meeting press conference stressed that “future policy actions will obviously depend on how the economy evolves.” The FOMC expects economic conditions to evolve in a manner that will warrant gradual increases in rate. The Committee said rates will be raised at ‘every other meeting’. The FOMC thus intends to hike four times in 2016 by 25 bps each. John Williams. Fed President of San Francisco sees three-to-five hikes this year if the economy manages to stick to expected track. Thus for now, ‘gradual’ stands for four rate hikes in 2016 and four in 2017. Markets, on the other hand expect the Fed to raise rates only twice this year. Going forward, the Fed said it will decide on the timing as well as the size of future adjustments only after examining both realized and expected economic conditions. According to Omair Sharif, rates sales strategist at SG Americas Securities in New York, the December meeting minutes to be released today will elaborate on whether the Fed in coming days will opt for moving rates at slower pace as decided, or, will they rely on economic data to provide guidance. “What’s the push-and-pull going to be like on the path between gradual and data-dependency?” Sharif feels will be the highlight of the minutes. Inflation outlook The Fed has stressed on several occasions that unemployment rate and inflation figures are factors that guide the Fed in arriving at rate hike decisions. Before taking decision of subsequent hikes, the Fed said it would monitor inflation figure, which though has increased over time continues to remain way below the 2 per cent inflation target. The minutes will likely show that Fed expects 4.7 per cent unemployment rate this year. Inflation is estimated to be at 1.6 per cent. The Fed in coming days will have to examine the impact of rising dollar, falling oil prices and the pace of strengthening of consumer demand on price stabilization to gauge whether the criteria it set for subsequent rate hikes is being met. The minutes will further throw light on whether the Fed will hike based on their expectation that prices will move up, or will it wait to gather evidence that price pressures have actually started rising. Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York. Costerg expects policy makers will rely on their forecasts for the next rate hike, which he anticipates in March. Still, going forward “it seems from Yellen’s messaging that they are going to base the 2016 hikes more on actual inflation, rather than expected inflation,” he said. What convinced the doves that it was okay to move? The minutes will also likely explain why there were no dissenters at its December meeting. In the run up to the December 15-16 meeting several voting FOMC members like governors Lael Brainard and Daniel Tarullo had expressed their preference for near zero rates for a little longer. It would thus be interesting to note in the minutes what prompted them to be fine with the idea of a rate hike. Emanuella Enenajor, a senior economist at Bank of America Merrill Lynch in New York would want to know “what concerns some of the more dovish members of the FOMC had, what the discussion around their concerns was like, and what factors made them comfortable with the decision that was made”. And finally the minutes can be expected to provide details on the Fed;s plans to reduce its balance sheet, which has jumped to $4.5 trillion from $900 billion in 2008. On being probed about the Fed’s large balance sheet Yellen had said “a lot has changed since pre–financial crisis in terms of the financial system, and we are studying -- we are engaging in a project at this time to consider what our long-run operating framework should look like.” For more information, read our latest forex news.