There seems to be little doubt that the Federal Reserve will raise their target for the Fed funds rate to 5.00% at the May meeting. However there remains some disagreement as to what will happen at the June meeting. Strong economic reports and speeches by some Fed governors have seemingly shifted the balance in June.

Analysis by macroblog notes the 5.00% target for May and a near 60% chance of a 5.25% rate for the June meeting. However Fed watcher, John M. Berry at Bloomberg.com is not convinced that the June hike is a certainty,

The key to whether the Fed stops after one more quarter- percentage point increase in its target for the overnight lending rate, to 5 percent, on May 10 will be the outlook for a moderate slowing in economic growth in the second half of the year. Such a slowing would keep inflationary pressures at bay, officials believe.

Less interesting than the actual end of the rising rate cycle is the effect these higher short term rates are having on specific companies and the economy as a whole. One interesting example of this was pointed out by Going Private.

They walk us through the effect interest rates can have on a leverage buyout. Since most deals are leveraged in one form or fashion the rapid rise in LIBOR rates can greatly affect cash flow and valuations. The risk to the deals already done is what stance they took toward their funding. Going Private fears that some firms made a (losing) bet on continued low rates,

…I wonder, however, with all the fast-paced deal making, how many buyout deals bet the farm on low rates. Also, this deal isn't that highly leveraged. Debt to equity ratios hit 5:1 and even 6:1 in a few smaller deals I know about. Watch out. Raising a distressed and special situations fund seems like a wise thing to do just now.

In short the last twenty five basis points may not make a big difference to many investors, but to some it could be the proverbial straw that breaks the camel's back.