Amateur

Zimbabwe 10 Trillion by FredMan, on Flickr

ETA worth about $0.03 US right before the currency was abandoned in 2009.

"Zimbabwe hasn't fallen apart"

Ever heard of a modern, productive, civilized country called Rhodesia ?  Probably not.

I have one hundred and sixty trillion $Zim about two feet from me right now. Three banknotes.

a 25bp or 50bp hike is already factored into.  the credit and equity markets price the future, not the present.

ar-jedi

English?

interest rates are set by the Federal Reserve Bank.  the Fed (actually the FOMC) meets about every 2 months to discuss monetary policy vs current economic conditions.  in the process, they set what is called the "target federal funds rate".  in most cases they leave it unchanged, but as the economy heats or cools, they discuss (in public sessions) whether to decrease or increase money supply by changing the target rate.  but this is not done in a knee-jerk fashion, it's bantered about for several meetings (i.e. about a half a year) before anything is committed to.  hence, the Fed/FOMC gives off signs at least a quarter in advance of actually doing anything.  

target rate increments/decrements issued by the Fed are typically in quarter percent or half percent measures.  numerically, 0.25% or 0.50%.  in the debt field, 1% = 100 "basis points", or "bp".  so, a 25bp increase is 0.25%, and accordingly a 50bp increase is 0.50%.  (and of course these could be decreases as well...)

credit and equity markets (read: the bond market and the stock market) "price the future" -- that is, it's less about the current value of things (e.g., bonds/stocks) and more about the future value of those things.  and the traders in these markets listen to what the Fed/FOMC is saying.  they have to.  for example... if the Fed has signaled for some time that interest rates will rise, by the time it happens the bond market has already priced the rate increase in.  in the case of bonds, bond prices will go down IF there is ample evidence from the Fed that interest rates are headed upward.  (issued bonds become less valuable as interest rates rise; as an example, an issued bond at 3% yield does not look "as attractive" as the interest rate comes up towards 3% -- in fact, very minor interest rate increases can have a marked impact on bond prices).  

for the reasons enumerated above, by the time the Fed upticks the target rate by 25bp or 50bp, the bond market and stock market have already adjusted to this fact well in advance.  typically, the only real surprise is when the Fed *doesn't* do something it was fully expected to do... the bond market likes predictability -- that's how debt instruments work best.  when there is political or economic chaos (see Venezuela, Argentina, Brazil, etc), entropy takes over in credit markets and the result is rapidly fluctuating bond prices and high coupon yields -- a sure sign that things are going sideways.

ar-jedi

eta
https://en.wikipedia.org/wiki/Federal_funds_rate
https://en.wikipedia.org/wiki/Federal_Open_Market_Committee

negative interest rates here we come.

I don't believe this is true, I think they know full well what they're doing, but the only choices they have are to kick the can or let it burn. The latter choice is exceedingly painful for the financial sector and for a time for the overall economy.  They can't fix it, it is beyond their control and they know it.  All they can do is mark time and hope something changes.

The 100, the 50, and the 10?

I bought $100Z Trillion on Ebay for $5, just for white elephant handouts.  I got hosed on the exchange rate (worth about $0.30US), but hell, they're fun to pass around.

It is important to note that this view is through an extremely narrow lens. It is an explanation of how the Fed does what it does- not whether or not they should be doing this, or have the competence to do so.

Who should control the price of goods and services? The market, correct? Interest rates are the price of money. The control exercised by the Fed is a monopoly on the price of money. Monopolies only happen with government help, and reap disastrous consequences.

The financial markets do take into account interest rates, but the rates are "wrong." They are picked artificially. The difference between the "correct" interest rates (as would be set in a free interest-rate market), and the rates picked by the Fed = the size of a financial bubble. The Fed causes the boom-bust cycle in the economy, they don't solve it.

Yes. Unless you're wrong and we go into a deflationary death spiral. Then you'll wish you didn't have that debt as they take your house you can no longer pay for.

Psst!  QE hasn't stopped.