The FED kept the rate too low for too long. FYI in the 60s it was seen normal to have 8 to 12% interest rates.

This means too many cheap Dollars are floating around now which are looking for a return on investment.

This buoys all asset classes, some more, some less. It also steepens the differences between capital income and labour income (e.g. your wage stagnates, but the rent just keeps on rising with 7% a year). But the later part is just collateral damage.

Most important are two things: 1) as soon as the FED starts raising the interest, absolutely everyone expects them to keep raising it until they are at 3 to 4% again eventually. This is why this is also called a big turnaround in interest. The 0.25 is merely nothing, yes, but the first soldier of a massive army to invade you is also just one guy. And 2) The long cheap money phase underneath is rotting the economy. Everyone knows it, nobody talks about it. It's not that capitalism is steering into its next cyclical crisis faster because of that collateral damage effect from above, no, it's mainly that more and more corporations are zombified or fixed on by easy money. Why improve, think hard, perpetually cut costs and look for a better way to make more money if the credit is flooding into your company so plentiful and cheaply? A lot of corporations would topple over under a "sudden" 2% interest rate increase. A lot of business models are not viable any longer except for the cheap resupply of capital that keeps them alive. So returning to normal interest rates likely will simply unfold the creative destruction we were spared so far (but didn't skip it - it's just stored in the economy for now as potential destruction as soon as rates rise). And a start in rising rates promises to more raises in the future. Going to 0.25 and then back to 0 would make the conclusion of turning the FED into a laughing stock and an unreliable partner who disconnected rates from any economic effect.