Washington

BARRING an unforeseen calamity, the Federal Reserve will raise short-term interest rates this week. Among Fed watchers, this is known as "lift-off". The analogy is misleading. Short-term rates have been stuck near zero since late 2008, but they are not about to rocket upward. The anticipated increase is a tiny 0.25 percentage point. That is still historically low, and Federal Reserve chair Janet Yellen has said that she expects that further increases will be gradual.

What is more, the fed funds rate - by itself - is not especially significant. It applies mainly to overnight loans between banks. The long-term interest rates that most influence the economy will not move much. Last week, rates on 30-year fixed-rate home mortgages fluctuated around 3.9 per cent, according to Freddie Mac, and rates on 10-year Treasury bonds hovered near 2.2 per cent, reports Bloomberg. All in all, "it's going to be a very gentle lift-off", says economist Ted Gayer of the Brookings Institution.