The Federal Reserve raised interest rates and signaled it will stick to a gradual path of future hikes. Roselle Chen reports.
The U.S. Federal Reserve raised interest rates for the second time in three months. It based its decision on steady economic growth, strong job gains, and confidence that inflation is rising to its two percent target. Fed Chair Janet Yellen: (SOUNDBITE) JANET YELLEN, FEDERAL RESERVE CHAIR, (ENGLISH) SAYING: "Today's Federal Open market Committee decided to raise the target range for the federal funds rate by 1 quarter percentage point, bringing it to 3 quarters to 1 percent. Our decision to make another gradual reduction in the amount of policy accommodation reflects the economy's continued progress toward the employment and plies stability objectives as assigned to us by law." The Fed also said there will be two more rate hikes this year and three more in 2018. John Lonski of Moody's Analytics: (SOUNDBITE) JOHN LONSKI, MANAGING DIRECTOR AND CHIEF ECONOMIST, MOODY'S ANALYTICS, (ENGLISH) SAYING: "Fascinating to me would be how the ten-year treasury yell fell in response to the rate hike, and, moreover on the equity side, one of the strongest-performing sectors in the U.S. equity market dealt with housing sector share prices. This is suggesting that the upside for short and long-term interest rates is viewed as being limited by the financial markets and perhaps also by the Fed." After Fed's decision was announced, stock markets extended gains and bond yields fell. The dollar was trading lower against a basket of currencies.