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US Federal Reserve raises interest rates US Federal Reserve raises interest rates
(about 2 hours later)
The US central bank has, as universally expected, raised interest rates again in the face of a strengthening domestic economy.The US central bank has, as universally expected, raised interest rates again in the face of a strengthening domestic economy.
The Fed raised its target rate to 0.75-1.0 per cent on Wednesday, up from 0.5-0.75 per cent previously.The Fed raised its target rate to 0.75-1.0 per cent on Wednesday, up from 0.5-0.75 per cent previously.
Only one voting member of the Federal Open Market Committee, Neel Kashkari of the Minneapolis Fed, voted against the increase.Only one voting member of the Federal Open Market Committee, Neel Kashkari of the Minneapolis Fed, voted against the increase.
The FOMC members also stuck with their so-called "dot plot" projection of a total of three hikes in rates this year, going against expectations in some quarters of a more aggressive forecast for monetary tightening. The FOMC members also stuck with their so-called "dot plot" projection of a total of three hikes in rates tin 2017, going against expectations in some quarters of a more aggressive forecast for monetary tightening.
That implies two further hikes later this year.
The dollar index initially slumped to 101.04 in the wake of the data having previously been at 101.5. The dollar index initially slumped to 101.04 in the wake of the data having previously been at 101.5. 
10 year US Treasury bonds fell more than seven basis points to 2.51 per cent. 10 year US Treasury bond yields fell more than seven basis points to 2.51 per cent.
“In view of realised and expected labour market conditions and inflation, the committee decided to raise the target range for the federal funds rate,” the Federal Open Market Committee said in its statement. The S&P jumped almost 1 per cent.
“In view of realised and expected labour market conditions and inflation, the committee decided to raise the target range for the federal funds rate,” the FOMC said in its statement.
“Near-term risks to the economic outlook appear roughly balanced.”“Near-term risks to the economic outlook appear roughly balanced.”
In her press conference immediately after the decision Fed chair Janet Yellen said: “Our decision to make another gradual reduction in the amount of policy accommodation reflects the economy’s continued progress/.Today’s decision is in line with that view, and does not represent a reassessment.”
Analysts speculated on the timing of the next move.
"Attention will now most likely shift to the June 14 meeting when many expect a further increase in rates," said Lee Ferridge, head of multi-asset strategy for North America at State Street Global Markets.
On Thursday the Bank of England will announce its own March interest rate decision, with economists universally expecting no change in the 0.25 per cent rate of borrowing.