Bank stocks surge after the Federal Reserve raises rates

Comex Gold

New Fed chairman Jerome Powell's first press conference clocked in at about 45 minutes, shorter than his predecessor Janet Yellen, who typically went for about an hour.

Powell, however, is not an economist.

"There's no sense in the data that we're on the cusp of an acceleration in inflation", he said. Both inflation and productivity growth are sluggish, which suggests wages should be as well.

But with very strong jobs markets, record business and consumer sentiment, low unemployment and signs of rising inflation, even dovish Fed officials have indicated their support for tighter monetary policy.

“Global financial markets will react with volatility if the Federal Reserve unveils any surprises today, Elliot began. But the new economic forecast, which includes a median projection for the path of future rate hikes, made no change to the December projection for three hikes this year.

Now the Fed holds four press conferences a year, following meetings when they issue their quarterly economic projections. Many credit card loans already come with a variable interest rate pegged to Fed rate increases. Unemployment is now expected to fall to 3.8 percent this year and 3.6 percent in 2019, which would be the lowest level in decades.

General Mills slid more than 8 percent after the Cheerios cereal maker cut its yearly earnings forecast, citing a sharp increase in freight and commodity costs.

The U.S. central bank will also update its assessment of the economy. Fed officials project 2-percent GDP growth In 2020.

He was referring to the fact that the Fed said it also meant to raise rates in 2019 and 2020.

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"In view of realized and expected labor market conditions and inflation, the Committee chose to raise the target range for the federal funds rate to 1.1/2 to 1-3/4 percent", the statement said. But officials were divided, with slightly less than half indicating they expect to raise rates at least four times this year.

Wednesday's rate hike is the sixth since late 2015.

At the two-day meeting, the Federal Open Markets Committee (FOMC) voted unanimously to raise the Federal Funds target range from 1.25%-1.5% to the 1.5%-1.75% band, in light of a strengthening economic outlook in recent months.

The Federal Reserve announcement is scheduled for 2 p.m. ET. The Fed is likely to stick with its three planned rate hikes this year for now, but may hint at a fourth.

Fed policymakers will also release their quarterly economic projections after the meeting.

The Fed has been raising rates slowly since 2015, moving the U.S. away from the ultra-low levels put in place following the financial crisis.

US stocks are mixed Wednesday morning as investors wait for news on interest rates from the Fed. Bond yields are little changed after they jumped on Tuesday.

Federal Reserve Board Chairman Jerome Powell testifies during a Senate banking committee hearing in Washington, D.C., on March 1.

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

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