Fed raises rates again, sees two more hikes in 2018

Fed raises rates again, sees two more hikes in 2018

NEW YORK (Reuters) - The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the U.S. central bank's shift from policies used to battle the 2007-2009 financial crisis and recession.

In raising its benchmark overnight lending rate a quarter of a percentage point to a range of between 1.75 percent and 2 percent, the Fed dropped its pledge to keep rates low enough to stimulate the economy "for some time" and signalled it would tolerate above-target inflation at least through 2020.



“The Fed’s path of gradual rate hikes and slow sheet reduction seems well established at this point. The trajectory of U.S. inflation or the broader U.S. economy would likely need to change materially for the FOMC to deviate from that path. But U.S. economic data has been remarkably steady. Recent developments in Italy, Argentina, Turkey, Brazil and elsewhere aren’t severe enough to force the Fed’s hand. Chairperson Powell has been clear he doesn’t view Fed policy as the source of turmoil, so those hot spots would need to pose a real risk to the global economy for the Fed to react.”


STOCKS: The Dow <.DJI> weakened to show a loss of 0.2 percent, but was already down slightly before the statement. The S&P 500 <.SPX> extended a slight loss and was also down 0.2 percent. BONDS: The 10-year U.S. Treasury note yield rose to 2.9884 percent and the 2-year yield rose to 2.5901 percent. FOREX: The dollar index <.DXY> turned slightly positive.

(Americas Economics and Markets Desk; +1-646 223-6300)

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Updated Date: Jun 14, 2018 00:06:35 IST

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