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Powell marks start of Fed tenure with rate rise

Powell marks start of Fed tenure with rate rise

The 2020 gross domestic product growth median projection was also unchanged at 2 per cent.

"We suspect the Fed is leaning on the mixed inflation data in wages along with the escalating risks of a trade war to buy some time before making material changes to their rate forecast", said Charlie Ripley, senior investment strategist for Allianz Investment Management.

There were no dissents to the vote to raise rates. Americans with credit card debt are especially vulnerable to rising interest rates. The central bank continues to project three rate hikes in 2018.

The general consensus amongst analysts appears to be that the Fed could very well upgrade forecast projections for interest rates in the longer-term, and the extent to which this happens will be key with an unambiguous set of upgrades likely to see the Dollar pop higher. Of the 15 Fed board members, six anticipate the Fed will hike four times this year and one believes five hikes will be necessary.

The Fed said it expects to increase rates twice more this year.

The question is what his plans will be for the central bank later this year, as the Fed wrestles with how to prevent the economy from overheating. The average national savings account interest rate was 0.6 percent before the Fed began raising rates in 2015, according to FDIC data.

But the Fed's new forecast does envision somewhat stronger economic growth compared with its previous estimate: It raises the estimate to 2.7 per cent growth this year, up from 2.5 per cent in the December projection, and 2.4 per cent in 2019, up from 2.1 per cent.

Some analysts say a short-term economic stimulus from Congress - in the form of a $1.5 trillion tax cut and federal spending increases - could eventually push the Fed to add a fourth rate move.

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The Dow Jones shed nearly 45 points at 24,682. The Fed said overall inflation was below 2 percent and expects it to stabilize around the 2 percent mark over the medium term. It's the first move in what's expected to be a busy year, with Fed members indicating they expect to pass two or three additional hikes before next January.

"We're advising clients to buy now - interest rates are still historically low", Jones said, noting that potential buyer activity has been rising in the Chicago area recently with the arrival of spring.

The Dollar needs a "hawkish" tinge to the event considering the pressure the currency finds itself under in preceeding hours; the GBP/USD exchange rate is seen trading higher by 0.45% at 1.4068 while the EUR/USD is up 0.32% at 1.2287.

Speaking of prices, they're crawling back up after a weak performance through the middle of 2017, but both the core Consumer Price Index and the Fed's preferred gauge based on consumer spending habits remain below the central bank's 2 percent goal.

U.S. stocks are heading steadily higher at mid-session as traders await the interest rate decision.

"Whenever the Fed says interest rates are going up, (our clients) get a little nervous", he said.

Federal Reserve Chairman Jerome Powell arrives or a news conference following the Federal Open Market Committee meeting in Washington, Wednesday, March 21, 2018. Still, she said, "We will need to be vigilant" because a booming economy can lead to a relaxation in lending standards.

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