Fed raises rates by further 0.25%; signals one more hike this year

Plans to begin balance sheet normalisation

In a move widely expected by markets, the Federal Reserve has increased rates for the second time this year by a further 25bps, and has indicated it is still planning to raise them once more in 2017, despite weaker economic data.

Following a two-day meeting, the Federal Open Market Committee (FOMC) has voted by a majority of 8 to 1 to increase the Federal Funds Rate to 1%-1.25% from 0.75%-1%. This is the Fed's third consecutive quarterly increase after the central bank hiked rates in March and December 2016, by 25bps each time. The central bank is also still on track to raise rates one more time this year, according to the FOMC's projections which have remained unchanged since its March meeting, despite the market expecting today's decision to be the last hike of 2017. This also comes despite the probabilit...