>Doug Henwood wrote:
>
>>[this is more hawkish than expected (by the markets, not by me) -
>>"further policy firming" are the magic words, carried over from the
>>previous announcement, as was much of the 2nd graf]
>
>I'm surprised that you're not surprised. The rate hike had to
>happen....but why the heavily hawkish signals...hikes as far as the
>eye can see...
>
>Who are they trying to spook and why? Is it really inflation fears?
>Or fear of a general scuttle of the dollar?
Historically, the Fed has almost never made policy on international considerations. My guess is that they really want to deflate the housing bubble, and they're worried about wage inflation and slowing productivity. Bernanke said at a talk at the CFR I attended in Jan 2005 <http://www.cfr.org/publication/7618/c_peter_mccolough_series_on_international_economics.html> that in a "maturing" expansion, such as this one, productivity deteriorates, and that would incline the Fed towards tightness.
Doug