Good Fed news for Christmas

THE act was not swift, but, ultimately, it was decisive. It is good that Janet Yellen and the Federal Open Market Committee have done the deed. The 10 to zero majority for the 25 basis-point rise in the Federal Reserve's short-term policy rate came three months later than we had advocated but it is better late than never.

It may be too soon to think of the Fed chair's legacy. Yet history will judge her as having commanded a unanimous vote for a landmark move- the Fed's first hike since 2006 - ahead of a fraught election year in which the US central bank stands to get caught up in US domestic politics. Up to Wednesday's action, none of the central bank governors of the G7 leading industrial countries had any experience of tightening credit in their present jobs. Ms Yellen now stands ahead of the men in the crowd.

Ms Yellen is right to broadcast the hike as a signal of confidence in the US economy. We need to see the medium-run performance - the next six to eight quarters - to evaluate her judgment. It is helpful that the central bank didn't change its "dot plot" for 2016 that projects one rate hike each quarter. According to this forecast, the target fed funds rate would reach 1.4 per cent at the end of 2016.