The Federal Reserve yesterday raised its target range for the Fed funds rate by 25 basis points to 0.25% to 0.50%–the first hike in nine years. The reasoning, as the Fed explained, is the “considerable improvement in labor market conditions this year” and the outlook for inflation “will rise, over the medium term, to its 2 percent objective.” But the economic data is mixed, as yesterday’s sharply divergent US macro updates remind. Housing starts rebounded smartly in November, but industrial production tumbled 0.6% last month—the biggest monthly decline in more than three years. As a result, output is now contracting by more than 1% a year.
Continue reading →

● Fed raises target rate by 25bp–first hike in 9 years | WaPo
● Slight changes for Fed’s new median macro forecasts | Federal Reserve
● US housing starts and building permits rebound in November | NY Times
● US industrial output slumps in Nov; manufacturing flat | MarketWatch●
● US Mfg PMI slips to 3-year low in Dec | Markit
● German business sentiment dips but still at high level | Reuters