So what does this mean for consumers?
The 2-year Treasury note yield has risen in tandem with the fed funds rate target, although not by the same magnitude each month. Yields did rise 31 basis points in October from the September average. Even though we have finally seen some increases in long term yields, these haven't been as large as increases in short term yields. The 10-year note yield did jump 26 basis points in October to 4.46 percent from the September average. At the same time, the average yield on 30-year fixed rate mortgage loans increased 30 basis points to 6.07 percent. Market rates move along with expectations of Fed rate changes, so Treasury yields and mortgage rates will probably continue to rise after today's rate hike, but only because investors are now expecting the Fed to raise the target rate again in December and January.

Some consumer rates don't float freely in the market, but are determined by banks, which in turn depend on the Fed. For instance, banks' corporate base rate, also known as the prime rate, moves in lockstep with the Fed. Given the 300 basis point spread, Tuesday's rate hike will push the prime rate up to 7 percent. Typically, banks tie their home equity loans as well as credit card rates to the prime rate.

Home equity loans are quite popular in that they remain (until the next tax reform) tax-deductible. While some homeowners refinanced their home loans to cash out equity, some may simply have used lines of credit to borrow against their home equity. Each measured increased in the fed funds rate target - and subsequently home equity loan rates - hurts consumers just a little bit more. We are taught in Econ 101 that all decisions are made at the margin. This means that each 25 basis point increase in the fed funds rate tightens the screws on one or two or three more homeowners.

In a similar fashion, credit card rates that are tied to banks' prime rate see incremental increases in the interest rate. For those consumers that maintain balances, the incremental 25 basis point hike will make a difference. Particularly now that consumer regulations are forcing credit card companies to double the minimum payments on consumers credit cards.

While the measured increases in the fed funds rate target are tightening the screws on consumers who borrow, they are also boosting interest income for savers. For several years, bank rates on savings accounts, including certificates of deposit, have been miserable. Finally, banks are offering rates (generally in line with Treasury yields) that make it reasonable to save again. Indeed, interest income payments on savings accounts are once again noticeable. While rising interest rates are generally viewed in a negative fashion by equity investors, small savers who do not invest in the stock market will be happy to see their savings account grow.