The FOMC can rarely get away with a rate hike and then have to turn right around with a rate cut.  But getting at least one of the incremental hikes today would get us closer to a normalized interest rate structure.  Imagine if the FOMC just leaves rates here with no changes at all and we do end up getting a double-dip recession.  At that point the Fed would not even have the classic tool of cutting rates to ease
the burden.  Then the Fed will get to start considering asset purchases all over again.

Isn’t the market looking for a continued ‘Fed Exit Strategy’?  If the Fed doesn’t start hiking rates soon, the exit strategy could ironically have to be put off indefinitely.

There are literally hundreds of other opinions here.  Many want rates kept here until unemployment really improves rather than just gets less-bad or improves nominally.  Many want the yield curve steep for the banks to be able to stay healthy as they try to get off the government dime and as they try to remain profitable from operations.  And no one wants the consumer to face much higher interest rates.

Hiking rates now would at least allow for rate cuts ahead if things start to weaken again or if we do get the double-dip recession scenario.  Still, the odds of a rate hike today are almost nil.  The most recent Fed Fund Futures data from the CME does not even really get the implied Funds rate to 0.25% until July and an implied 0.50% is not likely until November or December.

JON C. OGG