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U.S. Fed raises rates

UPDATE 11:38 a.m.

The Federal Reserve has raised its benchmark interest rate for the second time this year and signalled that it may step up its pace of rate increases because of solid U.S. economic growth and rising inflation.

The Fed now foresees four rate hikes this year, up from the three it had previously forecast.

The central bank raised its key short-term rate Wednesday by a modest quarter-point to a still-low range of 1.75 per cent to 2 per cent. The move reflects the economy's resilience, the job market's strength and inflation that's finally nearing the Fed's target level. The action means consumers and businesses will face higher loan rates over time.

It was the Fed's seventh rate increase since it began tightening credit in 2015, and it followed an increase in March this year.

The Fed announcement helped resolved a debate in financial markets over whether the Fed under Jerome Powell, who succeeded Janet Yellen as chairman in February, might see a need to signal a possible acceleration in rate hikes. The statement the Fed issued Wednesday after its latest policy meeting ended suggested that he does.


ORIGINAL 11:26 a.m.

The U.S. Federal Reserve has raised its short-term federal fund rate by 0.25 points to a range of 1.75 to 2 per cent.

More coming.



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