US Federal Reserve on Wednesday raised the benchmark interest rates for the fourth time since December 2015 and unveiled plan to start trimming its balance sheet.

“In view of realised and expected labour market conditions and inflation, the (Federal Open Market) Committee decided to raise the target range for the federal funds rate to 1% to 1.25%,” Xinhua quoted Fed as saying after concluding its two-day monetary policy meeting.

The central bank acknowledged the continuous progress in labour market while expressed their concerns over weak inflation.

Fed officials lowered their forecast for unemployment rate for 2017 down to 4.3%, compared to 4.5% projection made in March, while their forecast for inflation rate in 2017 was revised down to 1.6% from their forecast of 1.9% in March. </s> WASHINGTON — The Federal Reserve is raising a key interest rate for the first time in a year, reflecting a resilient U.S. economy and expectations of higher inflation. The move will mean modestly higher rates on some loans.

The Fed is signaling that additional rate increases will likely be made slowly as the economy improves and inflation edges closer to the Fed’s 2 percent target.

The central bank is increasing its benchmark rate by a quarter-point to a still-low range of 0.50 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

President-elect Donald Trump’s plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months. </s> WASHINGTON — The Federal Reserve is raising a key interest rate for the first time in a year, reflecting a resilient U.S. economy and expectations of higher inflation. The move will mean modestly higher rates on some loans.

The Fed signaled in a statement Wednesday that additional rate increases will likely be made slowly as the economy improves and inflation edges closer to the Fed's 2 percent target.

The central bank is increasing its benchmark rate by a quarter-point to a still-low range of 0.5 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

President-elect Donald Trump's plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.

The economy, after growing at an anemic annual rate of 1.1 percent in the first half of this year, accelerated to a 3.2 percent pace in the July-September quarter. That pickup has lifted hopes that the economy will keep rising, fueled by steady hiring gains. The unemployment rate is at a nine-year low of 4.6 percent.

In the month since Trump's victory, investors have sent stock prices surging to record highs and driven up bond yields. The markets have calculated that Republican control of Congress will enable Trump to cut taxes, ease regulations and accelerate infrastructure spending — and that higher economic growth, inflation and corporate profits will result.

The Fed's action Wednesday should have little effect on mortgages or auto and student loans. The Fed doesn't directly affect those rates, at least not in the short run. But rates on some other loans — notably credit cards, home equity loans and adjustable-rate mortgages — will likely rise soon, though only modestly. Those rates are based on benchmarks like banks' prime rate, which moves in tandem with the Fed's key rate. </s> WASHINGTON—The Federal Reserve has raised its benchmark interest rate for the third time in six months, providing its latest vote of confidence in a slow-growing but durable economy. The Fed also announced plans to start gradually paring its bond holdings later this year, which could cause long-term rates to rise.The increase in the short-term rate by a quarter-point to a still-low range of 1 per cent to 1.25 per cent could lead to higher borrowing costs for consumers and businesses and slightly better returns for savers.The central bank chose to raise rates again despite an economic slowdown at the start of 2017, which it predicts will prove temporary. It foresees one additional rate hike this year, unchanged from its previous forecast. It gave no hint of when that might occur.Read more:U.S. Federal Reserve hikes interest rate for second time in 3 monthsArticle Continued BelowToronto, New York markets see modest losses as U.S. Fed releases meeting minutesNorth American markets rally as U.S. Federal Reserve hikes interest ratesThe latest Fed rate hike, announced in a statement after a policy meeting, comes as the U.S. economy is growing only sluggishly. Even so, many of the barometers the Fed monitors most closely have given it the confidence to keep gradually lifting still-low borrowing rates toward their historic norms. </s> WASHINGTON—The Federal Reserve said it would raise short-term interest rates and spelled out in greater detail its plans to start slowly shrinking its $4.5 trillion portfolio of bonds and other assets this year.

Fed officials said they would increase their benchmark federal-funds rate on Thursday by a quarter percentage point to a range between 1% and 1.25% and penciled in one more increase later this year if the economy performs in... </s> The Federal Reserve increased short-term interest rates by a quarter percentage point on Wednesday, and outlined a plan to trim its massive bond holdings amassed to bolster a recession-weakened economy.

The Fed's rate hike, to a 1.0-to-1.25 percent range, comes as the economy gives off mixed growth signals, with gross domestic product expansion at a mere 1.2 percent in the first quarter but unemployment at a low 4.3 percent in May. "The economy will continue to expand," Fed Chairwoman Janet Yellen said at a news conference, adding that job growth was "solid."

Meanwhile, the inflation rate is still below the 2 percent level that the Fed deems necessary for a healthy, growing economy and stable prices. The personal consumption expenditures measure, the Fed's preferred measure, inched up 1.7 percent in April, versus the year before.

The latest action of the Fed's policy-making panel, called the Federal Open Market Committee, marked the fourth increase in a gradual sequence that began in December 2015. The Fed paused after that, as tumult like Britain's vote to exit the European Union, jolted the financial world. It resumed last December with a 0.25% raise and added another 0.25% boost in March.

Will the Federal Reserve raise interest rates in June?

"We're not moving so aggressively as to put a brake on continued improvement in the labor market," Yellen said.

This latest in a series of raises is a reversal of the Fed's action to combat the financial crisis and the Great Recession. In 2007, as the economy worsened, the benchmark federal funds rate was 5.25 percent. The central bank began lowering it to near zero by the end of 2008.

Also as a result of the financial crisis, the Fed also started an unprecedented stimulus program to buy long-term bonds -- Treasuries and mortgage-backed securities -- in a bid to keep down long-term rates, and thus spur business and consumer borrowing and spark economic growth. From asset holdings of $900 billion before the recession, the Fed ended up expanding its balance sheet to $4.5 trillion.

On Wednesday, the Fed indicated that it would decrease the bond holdings eventually by $50 billion per month, or $600 billion per year. That should help long-trim bond yields to rise. But the process will be gradual, and take "years" to accomplish, she said, adding "like watching paint dry."

Exactly when the next rate increase will be is a matter of conjecture. But the Fed indicated it likely would increase short-term rates one more time this year, and three times in 2018.

All along, Yellen has made a point of wanting to assess how the economy was behaving before moving again. "They don't want to be in any hurry," said Jason Browne, chief investment officer of FundX Investment Group. Many investors recall how the Fed in 1994, fearing inflation, quickly doubled rates to 6 percent, which slammed the bond market.

In that spirit, the Fed also wants to unload its bond holdings gradually, so not to disrupt the markets. "They're going to tiptoe into it until they can normalize things," said Jim Brilliant, portfolio manager of the CM Advisors Fixed Income (CMFIX).

Low rates have been a tonic for the stock market, because they spur investors to buy shares in hopes of gaining better returns than they'd get from fixed-income assets. When the Fed announced it wanted to wind down its bond purchasing in 2013, raising the prospect of higher bond yields, stocks sank. Lately, however, stock investors have gotten used to the notion of increasing rates.

Since the last Fed bond buy in late 2014, the S&P 500 has gained 10.2 percent on an annual basis, said Allen Bond, co-portfolio manager of the Jensen Quality Growth Fund (JENSX). And since the first rate increase of this cycle, in December 2015, the S&P rose 13.4 percent annualized. As Bond explained, the "waning Fed support forced investors to judge stocks by their fundamental and valuation characteristics." </s> Federal Reserve(WASHINGTON) — The Federal Reserve raised its benchmark interest rate again on Thursday, marking the third hike in six months.

The rate was boosted by a quarter of a point to 1.25 percent.

Following its meeting Thursday, the Fed did not change its forecast and says it still expects to raise rates one more time this year.

“Overall, we continue to expect that the economy will expand at a moderate pace over the next few years,” Fed chair Janet Yellen said.

That’s in spite of a sluggish economic to start of this year, according to Bankrate.com’s Greg McBride.

“At this point, they keep saying that the economic weakness is transitory, it’s going to pass, and raising interest rates at this meeting is consistent with that,” McBride explained. </s> Washington: The Federal Reserve has raised a key interest rate in response to a solid US economy and expectations of higher inflation, and it foresees three rate hikes in 2017. The Fed's action Wednesday will mean modestly higher rates on some loans.

The central bank announced after its latest policy meeting that it's increasing its benchmark rate by a modest quarter-point to a still-low range of 0.5 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

The Fed's move, only the second rate hike in the past decade, came on a unanimous 10-0 vote. It also released an updated economic forecast that showed modest changes to its outlook for economic growth, unemployment and inflation, mainly to take account of stronger growth and a drop in the unemployment rate for November to a nine-year low of 4.6 percent.

Its new projection has the unemployment rate dipping to 4.5 percent by the end of 2017 and remaining at that level in 2018.

The Fed foresees economic growth reaching 1.9 percent this year, slightly above its forecast in September, and 2.1 percent in 2017. That's slightly more optimistic than it projected in September.

The Fed kept its long-term estimate for economic growth at 1.8 percent, far below the 4 percent pace that President-elect Donald Trump has said he can achieve with his program of deregulation, tax cuts and increased spending on infrastructure.

The Fed's estimate that it will raise rates three more times in 2017 is up from an estimate of two increases at the September meeting. Its policy statement showed only modest changes in wording from the previous meeting. It said "economic activity has been expanding at a moderate pace since mid-year" helped along by solid job growth.

Trump's plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.

The economy, after growing at an anemic annual rate of 1.1 percent in the first half of this year, accelerated to a 3.2 percent pace in the July-September quarter. That pickup has lifted hopes that the economy will keep rising, fueled by steady hiring gains.

In the month since Trump's victory, investors have sent stock prices surging to record highs and driven up bond yields. The markets have calculated that Republican control of Congress will enable Trump to cut taxes, ease regulations and accelerate infrastructure spending - and that higher economic growth, inflation and corporate profits will result.

The Fed's action Wednesday should have little effect on mortgages or auto and student loans. The Fed doesn't directly affect those rates, at least not in the short run. But rates on some other loans - notably credit cards, home equity loans and adjustable-rate mortgages - will likely rise soon, though only modestly. Those rates are based on benchmarks like banks' prime rate, which moves in tandem with the Fed's key rate.

Mortgage rates have been surging since Trump's election victory last month on expectations that his economic program will accelerate economic growth and inflation.

Some Fed watchers expect faster growth to lead the central bank to shift its focus from trying to energize the economy to considering ways to counter the risk of too-high inflation. On that assumption, some are revising their forecasts for Fed rate hikes in 2017.

Before Trump's victory, the consensus view of economists was for two Fed rate increases next year. Now, some say they foresee three or possibly as many as four. Others think the Fed will be hesitant to step up the pace of rate hikes. For one thing, Trump's economic program still must win congressional approval and could undergo significant change along the way.

Last month after Trump's election, Fed Chair Janet Yellen told a congressional committee that Fed officials would be monitoring Congress' actions and "updating our economic outlook as the policy landscape becomes clearer." Other Fed officials have endorsed that wait-and-see approach. </s> The rate decision of the Federal Reserve is shown on a television on the floor of the New York Stock Exchange, Wednesday. The Federal Reserve is hiking a key interest rate for the second time this year and is planning to reduce the size of its $4.5 trillion balance sheet as well. Fed officials voted 8-1 to raise the federal funds rate to a range of 1 to 1.25 percent. (AP Photo/Richard Drew)
The Federal Reserve System raises the benchmark interest rate in the United States to a level between 0.5 and 0.75%. This is the second time in a decade that the Federal Reserve has increased interest rates.