After a very slow start to its monetary policy normalisation process, with only one rate hike in both 2015 and 2016, the US Federal Reserve (the Fed) today entered a new, more active phase for monetary policy.

Through the combination of good economic data and Fed rhetoric, the market gave the Fed an irresistible opportunity to lift interest rates again today, raising the Fed Fund target rate by a further 25bp to a new 0.75%-1.0% range.

In detailing the policy decision, however, the Fed statement was little changed from recent months, with no change to the Fed’s own expectations for the future path of monetary policy, ie. the ‘dots’ for 2017 remained at three rate hikes in total – two more to come this year.

The market has taken the statement and the unchanged 2017 ‘dots’ to be a little more dovish than expected.