Federal Reserve hikes interest rate for third time in 2017

This program. would gradually reduce the Federal Reserve's securities holdings by decreasing reinvestment of principal payments from those securities.

She declined to say whether she would like to serve a second term.

Though it assesses the overall economy, the Fed's mandates are to maximize employment and stabilize prices.

The decision to increase #Interest Rates from 1 percent to 1.25 percent was as a result of improved labor market conditions.

American economy grew only 0.7 percent in the first quarter of the year - the lowest quarterly growth rate in the last three years - but this was later revised to 1.2 percent, according to the U.S. Department of Commerce on May 26.

The impact of the Federal Reserves fourth interest rate hike in 18 months will range widely for individuals and businesses with loans or income-producing accounts.

The Dow Jones industrial average was up 22 points, or 0.1 percent, to 21,352, little changed from before the announcement.

By the end of the year, the Fed projects its benchmark rate will be at a neutral level, neither stimulating nor dampening economic growth. The move follows a record run of jobs growth in the United States that has driven the unemployment rate down to its lowest level in 16 years. Inflation has been well below the Fed's target of 2% per year for the last several years, and looking around the globe, he doesn't see any evidence that inflation is a likely problem. Annual inflation is running at 1.7 percent.

By then, the forecast would put the key policy rate at 3 percent, a level the Fed believes is a neutral rate - neither stimulating nor restraining growth.

Why does the Federal Reserve raise the interest rate?

Meanwhile Dennis de Jong, managing director at UFX.com, said: "Today's second rate rise of 2017 provides a chink of light in what has been a fairly gloomy day on Wall Street". And it's a sign that the central bank believes the USA economy is on solid ground.

The Federal Open Market Committee, which makes monetary policy decisions, had only one dissenter from the decision, Neel Kashkari, the president of the Mineeapolis Fed.

And in another signal of their confidence in the economy, Fed officials announced that they intended this year to begin reducing the $4.5 trillion in Treasury and mortgage securities and other assets the central bank has purchased since 2008 in an attempt to stimulate the economy.

The Fed amassed the record bond holdings in three rounds of so-called quantitative easing meant to stimulate US investment and hiring in the wake of the 2007-2009 financial crisis and recession. US 30-year yields were last at 2.769 percent after touching their lowest since November 9 of 2.765 percent earlier.

Some news reports have mentioned leading candidates to fill the three vacancies on the Fed's seven-member board. Fed officials previously increased the rate in March to a range of 0.75 to 1 percent.

Gold turned negative after the Fed rate increase.

Investing.com offers an extensive set of professional tools for the financial markets. Members now see the US economy expanding by 2.2 percent in 2017, up slightly from 2.1 percent three months ago. Here are the highlights from June's Federal Reserve meeting, and what this rate hike could mean to you.

Germany's DAX index is up 0.4 percent and Britain's FTSE 100 0.1 percent. In Asia, Japan's Nikkei 225 ended the day marginally lower. The dollar was largely flat against a basket of currencies after reversing earlier losses, while the price of gold fell. It is roughly flat against the pound, at $1.2758.

Neil Wilson, senior market analyst at ETX Capital, said: "The Fed stuck to its guns, raising rates by a quarter point and calling for another hike this year, in spite of some pretty awful inflation earlier that has the market doubting the central bank's willingness and ability to tighten again in the near-term".

Stay on topic - This helps keep the thread focused on the discussion at hand.