U.S. stocks are immersed in the wonderful reverie about the new government, and the "honeymoon effect" of President-elect Trump is enthusiastic, but the Federal Reserve does not think so.

For optimistic investors, former Federal Reserve Chairman William McChesney Martin, Jr. famously said in 1955, “The Fed’s job is while the party is in progress. Take away the full glass of wine”.

President-elect Trump has promised to cut taxes, reduce regulatory measures, and increase defense and infrastructure spending. Many people believe that Trump's taking office will bring a "honeymoon effect" to the United States and promote economic growth. .

However, the Federal Reserve stopped the dance, saying that the economic growth rate was close to the maximum sustainable speed, and faster growth would cause the inflation rate to rise to inappropriate levels. In order to prevent the economy from overheating, the Federal Reserve will raise interest rates at a faster pace. The more Trump's economic stimulus policies, the faster the Fed will raise interest rates.

“Currently, people’s expectations for the Trump administration are too high,” said Lewis Alexander, chief U.S. economist at Nomura Securities. “If the Trump administration increases stimulus, the natural reaction is that the Federal Reserve will increase stimulus spending.” Raise interest rates soon. Under normal circumstances, the economy does not work as planned, and the big question is whether Trump's fiscal stimulus policy can ultimately lead to economic expansion."

A few hours later, the Federal Reserve is almost certain to start raising interest rates for the first time since 2016. The current federal funds rate is 0.25-0.5. Maintaining such a low level of interest rates is to encourage borrowing and stimulate economic growth. . The market generally believes that this Fed meeting will increase the interest rate range by 25 basis points, which will weaken the economic stimulus policy to a certain extent.

With no suspense about raising interest rates, the biggest concern is how the interest rates will be raised in 2017.

Economic forecasts always require a lot of assumptions, but they are particularly difficult because Trump has not revealed much about his plans for governing. The only thing that is certain is that Trump’s victory has increased uncertainty about the economic outlook.

New York Fed President William C. Dudley, the third-ranking figure in the Federal Reserve, said at the breakfast meeting of the Association for a Better New York on December 5: For the next few years, "At this point in time, it's difficult to say exactly what will happen."

During the Trump campaign, he promised to achieve an annual growth rate of 4. Trump's remarks after his election also showed that his goal was only to create jobs in the short term. Treasury Secretary Mnuchin, who was just appointed by Trump, said in November, “Our first priority is to boost the economy and increase the growth rate to 3-4.”