Tom Lee on CNBC with Christmas Present

The Federal Open Market Committee (FOMC) announced a 0.75% increase in the federal funds rate, from 4.375% to 5.12%, on Wednesday night. This marks the first time since March 2020 that the FOMC has raised rates, and it comes as a surprise to many economists who had expected no further hikes this year due to falling inflation. Tom Lee, chief economist at Fundstrat Global Advisors, was one of those economists who had been expecting no further hikes this year. He argued that the Fed should focus on boosting employment rather than worrying about inflation, and he fought against the decision in 2022 - but ultimately lost out when 17 of 19 members voted for an increase in rates. Lee appeared on CNBC's Squawk Box program Thursday morning to discuss his thoughts on the decision and what it means for investors going into 2021. He said that while he disagreed with the decision to raise rates, he believes it will have minimal impact on markets given that inflation is coming down and interest rates are still low by historical standards. Lee also pointed out that Powell has pivoted from focusing solely on inflation to looking at labor market conditions as well - something which could lead to more stimulus measures next year if needed. He said this could be beneficial for investors as it could mean more money flowing into markets and higher stock prices overall. Overall, Lee believes that while there may be some short-term volatility due to the rate hike announcement, investors should remain focused on long-term trends rather than reacting too strongly in either direction over any single news event or economic indicator.