Fed's Rate Hike Sparks Debate Over Future Policy Tightening

The Federal Reserve's decision to hike interest rates by a quarter percentage point has sparked debate about how far the central bank will go in tightening monetary policy. Chairman Kevin Warsh described the move as removing 'a dose of accommodation' from the economy, which he said has strengthened and financial conditions that have become less restrictive.

Warsh's words were carefully chosen, leaving Wall Street wondering what comes next. The decision to hike rates was seen as a step towards returning to the 2% inflation target, with recent data suggesting inflation is trending above 3%. This comes after five years of inflation running above the Committee's objective.

Not everyone agrees on the severity of the inflation problem, however. While some see it as just about energy prices, others argue that price growth has been 'hot' across a broad set of goods and services.