The US Fed raised interest rates for the second time in three months. The central bank based its decision on the stable economic growth, a significant increase in the number of jobs and the belief that inflation is accelerating towards the benchmark.
The FOMC of the Fed has decided to raise the rate by 25 basis points to 0.75-1.00%.
Fed Chairman Janet Yellen pointed to the growth of confidence in the economy:
"We have observed the progress of the economy over the past few months, which exactly corresponded to our expectations," she said at the press conference.
Fed officials reiterated the forecast, according to which the central bank will raise the rate two more times in 2017 and three times in 2018. In 2016, the Fed raised the rate only once. However, many investors expected more hawkish statements in which the Fed would announce a total of four or five rate hikes in 2017.
The US stock market accelerated growth, while government bond yields declined due to modest macroeconomic forecasts and a gradual rate hikes indicated by the central bank. The dollar was falling to the basket of major currencies.
Members of the FOMC noted that inflation is "close" to the Fed's benchmark of 2%.
The fresh macroeconomic forecasts, published with the Fed's communiqué, have not changed much since December last year and have not given any indication that the central bank clearly understands how Donald Trump's policy will affect the economy this year and beyond.
"We did not discuss in detail the potential policy changes that could happen, and did not try to outline what our response would be; we have enough time to see what will happen," said the Fed chairman.
The new forecast, submitted by the Federal Reserve, assumes that the US economy grew by 2.1% in 2017, unchanged from the December estimates. The median long-term forecast of the interest rate level, at which monetary policy would be neutral, remained at 3.0%.
The Fed expects unemployment at the end of 2017 at around 4.5%, while core inflation should slightly exceed 1.9% against December’s estimation at 1.8%.
According to the Federal Reserve, the risks for the economy are "more or less" balanced.