Regardless of how gently or aggressively the Federal Reserve ends up raising rates, the success of the operation will be dictated by its stewardship of financial markets.

A rate increase isn’t in the cards anytime soon, yet the debate is already under way over whether the Fed should raise its target rate off the historic low of 0%-0.25% in small or large steps.

A big move risks derailing the recovery, but the small, quarter-point steps initiated by former Fed Chairman Alan Greenspan in 2004’s cycle are widely blamed for creating the bubbles in the housing and credit markets that were at the heart of the crisis.

Yet the market reaction to the removal of the most accommodative policy investors have ever seen, in place for almost a year already, could undermine the Fed’s intentions.

“Once the Fed starts to hike, the market’s going to take matters out of its hands,” said MF Global portfolio manager Don Galante.

Interest-rate markets, from Treasurys to swaps and futures, can be counted on to overshoot the Fed’s first move, even in a relatively transparent tight