Fed raises rates by quarter-point for second time in three months

Fed raises rates by quarter-point for second time in three months

The Federal Open Market Committee said in its statement that the labor market has continued to strengthen and economic activity has expanded at a moderate pace.

There was not much change in economic forecasts from the Fed's December meeting either, with unemployment, inflation and federal funds median forecasts unchanged from December.

Federal Reserve Chair Janet Yellen speaks during a news conference in Washington, D.C., on Wednesday.

The market has also shown incredible resiliency over its history, and we expect to see the same thing happening again in the coming weeks and months. Investors had widely expected the central bank's rate increase, which was spurred by steady economic growth, strong job gains and confidence that inflation is rising to the Fed's target.

Fourteen primary dealers said they saw the Fed raising rates to 1.25-1.50 percent at its Dec 12-13 meeting.

Fed's preferred inflation measure, the personal consumption expenditures price index, is expected to hold at 1.9 percent this year, and 2.0 percent in 2018, which is the Fed's target.

Fed officials hinted that it will hike interest rates two more times this year, as it had previously anticipated. The Fed had cut during the 2008 financial crisis to a record low in order to help steady the economy and only gradually began to increase it at the end of 2015.

The Fed last acted in December when it adopted only its second interest rate increase in a decade, but it has repeatedly cited the uncertainty surrounding economic outlook while details of Trump's economic policy program remain scarce.

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The Fed raised interest rates by 0.25 percentage points Wednesday, saying it is confident in the USA economic growth.

Meanwhile, the stock market has been climbing, and the Dow Jones Industrial Average surpassed a record 21,000 points in February.

S&P 500 e-minis were up 4.75 points, or 0.2 percent, with 70,767 contracts traded.

10 year US Treasury bonds fell more than seven basis points to 2.51 per cent.

Fitch also said that market expectations for a permanently lower equilibrium interest rate in the United States and the continuation of ultra-loose monetary policy for several more years could be increasingly challenged. The Nasdaq edged up 11 points, or 0.2 percent, to 5,868.

The dollar, meanwhile, is down 0.1 percent against the Japanese yen, at 114.63 yen.

The annual unadjusted Consumer Price Index released on Wednesday increased 2.7 percent, the highest in five years, and the unadjusted core CPI, excluding volatile food and energy prices, increased 2.2 percent for the full year.

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