US Fed raises key rates for 2nd time this year

The US Federal Reserve on Wednesday raised its benchmark interest rate by a quarter-point to 1 to 1.25 percent and said that another increase remains likely this year, despite the recent spate of weak economic data. That showed how little inflation there has been in the economy, a continued concern for Federal Reserve policymakers.

Meanwhile, the S&P 500 Futures traded 0.65 percent lower at 2,419.50 by 11:40GMT, while at 12:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 38.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). Trump's legal team denounced the report.

Also on Wednesday, a prominent Republican was among those shot by a gunman said to be angry with Trump. Scalise was listed in critical condition.

Added to another cautious recovery for sterling, that left the dollar index 0.04 percent weaker on the day at 96.936.

Market participants' focus will be on signals on the frequency of further hikes and how the Fed plans to unwind its huge Treasury bond stockpile over the years ahead.

The Fed also gave a first clear outline on its plan to reduce its $4.2 trillion (3.28 trillion pounds) portfolio of Treasury bonds and mortgage-backed securities, most of which were purchased in the wake of the 2007-2009 financial crisis and recession.

The Fed's revised forecasts reduced its estimate for unemployment by year's end to 4.3 percent from a March projection of 4.5 percent. It foresees one additional rate hike this year, unchanged from its previous forecast.

USA stocks dipped Wednesday as investors anxious about weak retail sales and oil prices sank.

The data had knocked the dollar and USA bond yields to its lowest level in seven months against a basket of currencies.

After gaining support from weak U.S. data on Wednesday, there was a sharp reversal after the firm Fed policy statement as the dollar gained renewed support. The euro edged up to $1.1220 from $1.1212.

The dollar fetched 109.35 yen JPY= , not far from Wednesday's eight-week low of 108.81 yen. Earlier, the 10-year note hit its lowest level since November.

"You can not help the impression that there is a gap between the Fed's bullish inflation forecast and the weakness in actual data", said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

"I think we're still in a position where the Fed will continue to be relatively accommodating", Mick Mulvaney, director of the Office of Management and Budget, told reporters Thursday at a briefing on government reorganization efforts.

The Federal Reserve increased interest rates on Wednesday for the second time in three months, citing continued U.S. economic growth and job market strength.

European stocks finished at their lowest level in almost two months Thursday, rattled as investors questioned the U.S. Federal Reserve's outlook for monetary policy as signs of flagging consumer demand have cropped up. Brent crude, used to price worldwide oils, shed $1.72, or 3.5 percent, to close at $47 a barrel in London.

European shares opened lower on Thursday, following falls in major indices in Asia. It's the second hike within three months.

  • Zachary Reyes