Fed raises rates, maintains forecast for one more hike

Federal Reserve officials forged ahead with an interest-rate increase and additional plans to tighten monetary policy despite growing concerns over weak inflation. Policymakers agreed to raise their benchmark lending rate for the third time in six months, maintained their outlook for one more hike in 2017 and set out some details for how they intend to shrink their $4.5-trillion balance sheet this year. “Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington. “The committee currently expects to begin implementing a balance sheet normalisation programme this year, provided that the economy evolves broadly as anticipated.” Commodity Trading Tips

Policymakers also issued forecasts showing another three quarter-point rate increases in 2018, similar to the previous projections in March.The Fed’s actions and words struck a careful balance between showing resolve to continue tightening in response to falling unemployment while acknowledging the persistence of unexpectedly low inflation this year.“Inflation on a 12-month basis is expected to remain somewhat below 2 per cent in the near term but to stabilise around the committee’s 2 per cent objective over the medium term,” the statement said. The committee had previously described inflation as close to its goal. The yield on 10-year US Treasury notes crept up after the decision, while the Standard & Poor’s 500 Index of US stocks increased. Data released earlier on Wednesday showed, on a year-over-year basis, the core version of consumer price inflation, which strips out food and energy components, slowed for the fourth straight month, to 1.7 per cent in May. Following that, the probability that the June hike would be followed by another increase this year dropped to about 28 per cent from 48 per cent, according to pricing in fed funds futures contracts. Nifty Trading Tips