The Federal Reserve Board today raised its federal funds rate to 2.25% from 2%. "Output appears to be growing at a moderate pace despite the earlier rise in energy prices, and labor market conditions continue to improve gradually. Inflation and longer-term inflation expectations remain well contained," according to a statement from the Fed.
"The market's yawning right now," said Colin Lundgren, vice president of institutional fixed income at American Express Asset Management. He said the rate change was no surprise. "Going forward, investors will pay very close attention to inflation data, which will signal if and when the Fed has to accelerate the pace," Mr. Lundgren said. "Today was much ado about nothing."
The Fed also increased the discount rate by 25 basis points to 3.25%. "All eyes are on the funds rate" and the discount rate is receiving "precious little attention from the market," Mr. Lundgren said.