Today is the big day for the Fed: This afternoon, the Federal Reserve's Open Market Committee is expected to raise interest rates above the near-zero levels they've been at for the past seven years. With unemployment at 5 percent and inflation at around 2 percent, the Fed probably sees the economy as strong enough for an interest rate hike.
A departure from a policy that has stood for seven years could be thought to be disruptive to the economy, but this probably won't be. For one thing, the markets have been expecting this for some time, and it's already baked in to most prices. As we noted the other day, mortgage rates have already risen in expectation of this.
The other thing to keep in mind is that the first rate hike is likely to be one quarter of one percent, or possibly one half. If it were a change from any other baseline - from 2 percent to 2 and a quarter, say - it would have minimal effect on the economy. This one is likely to as well.
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