US Fed holds interest rates, hints at future hikes

US interest rates are at 1.5 per cent to 1.75 per cent the highest in a decade

In view of realized and expected labor market conditions and inflation, the Committee chose to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent.

"Inflation on a 12-month basis is expected to run near the committee's symmetric 2 per cent objective over the medium term", the policy-setting Federal Open Market Committee said in a statement on Wednesday in Washington.

Currently, the futures market assigns 45 percent odds of three more quarter-point rate hikes before the end of the year, and that's something that hasn't been fully priced into stocks and bonds.

The survey-based consumer price index, a more widely watched inflation gauge, was up in April by 2.4% for the previous 12 months.

The FOMC's two-day meeting followed the release of data Monday that showed inflation measured by the central bank's preferred gauge had hit its 2 per cent target after being below that goal for nearly every month since April 2012.

That seemingly minor change, with the addition of the word "symmetric", is certain to receive a lot of attention from the economists who scrutinize every nuance for signals of their policy intentions.

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The statement said the economy has been growing at a moderate rate.

Stocks, which initially gained after the Fed statement, reversed course as potential USA restrictions on Chinese telecommunications companies reinforced investor concerns about trade relations between the United States and China.

The major averages ended the day just off their lows of the session.

All of these readings could cause volatility in the pound U.S. dollar exchange rate.

The voting committee asserted that they still expect "further gradual increases" against the backdrop of a continually strengthening labour market and accelerated economic activity - with record low unemployment and accelerated wage growth being the primary driving factors.

Eurozone inflation slowed to 1.2 per cent year-on-year in April, down from 1.3 per cent in March, and core inflation fell even more, raising questions about the European Central Bank's plan for withdrawing its monetary stimulus.

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"Officials remain on course to raise rates again in June and we expect two further 25 basis point rate hikes in the second half of this year", according to Hunter.

That meeting will be one of the four each year in which Powell will hold a press conference, which will allow him to explain the reasoning behind any move.

FOMC left the rates unchanged with a 1.625% mid-point for the 1.50% to 1.75% band.

The meeting also will provide the latest quarterly forecasts from all the Fed board members and regional bank presidents, which will include the key prediction of the number of rate hikes expected this year.

Many on Wall Street think the economy is accelerating so quickly that the Fed will have to hike rates three more times in 2018 to keep the economy from overheating.

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Arthur had been the bookmakers' favourite for the couple's third child, while Charles is the name of William's father. Naming their son, however, has taken somewhat longer. 'Prince Philip was also deeply devoted to Lord Mountbatten.

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