InvestingMarkets & Economy

The Fed will hike rates again in December — here’s why

Markets dismiss the inflation threat, but the new scattergram is revealing
  • The Fed completed its meeting on Wednesday in some disarray.
  • Chair Yellen expressed deep worry about job-market overheating.
  • A 0.25 percent hike is coming in December, another 0.50 percent in 2017, and another 0.75 percent in 2018.

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The important developments involving this week's Fed meeting first, the how and why later: August was a lousy U.S. economic month, and long-term rates are back down, mortgages on the low side of 3.50 percent, and the 10-year T-note at 1.61 percent, its lowest since September 8. Completing a clean sweep of August data, the entire housing series arrived this week below forecast. New permits, starts, sales of existing homes...all womp-womp. The meeting The Fed completed its meeting on Wednesday in some disarray, but different from apparent disarray. The Federal Open Market Committee voted to leave the overnight cost of money as-is, 0.25 percent to 0.50 percent -- but three voters dissented, demanding a hike. That’s the first three-vote dissent since 2014 (the dissenters wrong then, too). One window into the Fed is wide open: a schism between hawkish and narrow presidents of the twelve regional Feds and the Congressionally confirmed governors. Three regionals annually rot...