Fed Raises Interest Rates, To Reduce Balance Sheet 'this Year'

By Jeffry Bartash Markets MarketWatch Pulse

The Federal Reserve on Wednesday lifted its benchmark interest rate to between 1% and 1.25%, stuck to plans for one more rate hike in 2017 and said starting 'this year" it would gradually shrink its massive $4.5 trillion balance sheet. The central bank also cut its inflation forecast for 2017 to 1.6% from 1.9% as measured by the PCE index. And it predicted U.S. unemployment would end the year at 4.3% instead of its previous 4.5% forecast. The Fed said the U.S. economy is growing "modestly so far this year." The vote to raise rates was 8-1, with Neel Kashkari preferring to leave them unchanged.

Continue Reading Below

Copyright © 2017 MarketWatch, Inc.