The Fed's rate hike is less about a real inflation problem and more about protecting its reputation, which is bad news for borrowers and investors who are paying for a hike the Fed itself doesn't fully believe in.

• The Fed's own forecast says inflation next year is only an energy-price problem, so raising rates makes little sense on paper.
• Fed chair Kevin Warsh is treating the hike as an insurance policy in case the forecast is wrong.
• The Fed is still haunted by 2022, when it called inflation "transitory" and got blasted for waiting too long.
• The move is largely symbolic: it lets the Fed look on the ball even while it expects inflation to fade once oil prices come back down.
• Raising rates against your own forecast is the wrong call, and it shows the Fed has little confidence in its projections.

Outlook: If oil prices fall as the Fed expects, this hike will look unnecessary and could be reversed; if inflation sticks around, the Fed will claim it acted early.