Fundamental Comment

Fed’s inflation outlook raises expectations of March rate hike

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The Federal Reserve held its benchmark interest rate at a range between 1.25 percent and 1.5 percent, while predicted inflation to move higher thereby raising expectations of an interest rate hike in March.

After concluding the two-day policy meeting on Wednesday, policymakers voted unanimously to holding interest rates, as widely expected, at the last policy meeting for outgoing Fed Chair Janet Yellen.

The Fed said the economy continues to grow at “a solid rate” and the job market continues to gain strength, while inflation is "expected to move up this year," according to the Fed statement.  

Inflation "to move up this year and to stabilize around the Committee's 2 percent objective over the medium term."

The upbeat assessment for both growth and inflation has raised expectations the Fed would hike interest rates for the first time this year on March-20-21 policy meeting.

The Fed reiterated that "further gradual" rate hikes will be warranted.

The Fed also announced Jerome H. Powell will be the Fed’s new chairman on Monday morning.

As of 19:32 GMT, the dollar index soared 0.07 percent to 89.08.

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