The U.S. Federal Reserve raised interest rates on Wednesday and signaled a faster pace of increases in 2017 as central bankers adapted to the incoming Trump administration’s promises of tax cuts, spending and deregulation.
The increase in the federal funds rate to a range of between 0.50 percent and 0.75 percent was widely expected. But the prospect of a brisker monetary tightening contributed to a selloff in shorter-dated U.S. Treasuries and stocks.
In a news conference following the unanimous rate decision, Fed Chair Janet Yellen said Donald Trump’s election had put the central bank under a “cloud of uncertainty” and already prompted some policymakers to shift their view of what’s to come.
“All the (Federal Open Market Committee) participants recognize that there is considerable uncertainty about how economic policies may change and what effect they may have on the economy,” Yellen said.
Though Trump’s inauguration is still a month away, she said “some of the participants” had begun shifting their assumptions about fiscal policy. At least five of 17 Fed policymakers appeared to have boosted their interest rate outlook since September, according to the new “dot plot” of rate projections.