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class="Headline-headline-2FXIq Headline-black-OogpV ArticleHeader-headline-NlAqj">Fed lifts rates, sees faster pace of hikes in Trump's first year</h1></div></div></div></div><div class="TwoColumnsLayout-body-86gsE ArticlePage-body-container-10RhS"><div class="TwoColumnsLayout-left-column-CYquM"><article dir="ltr" class="ArticlePage-article-body-1xN5M"><div class="ArticleBodyWrapper"><div class="ArticleBody-byline-container-3H6dy"><p class="Byline-byline-1sVmo ArticleBody-byline-10B7D">By <a class="TextLabel__text-label___3oCVw TextLabel__black-to-orange___23uc0 TextLabel__serif___3lOpX Byline-author-2BSir" href="https://www.reuters.com/journalists/howard-schneider" target="_blank">Howard Schneider</a>, <a class="TextLabel__text-label___3oCVw TextLabel__black-to-orange___23uc0 TextLabel__serif___3lOpX Byline-author-2BSir" href="https://www.reuters.com/journalists/lindsay-dunsmuir" target="_blank">Lindsay Dunsmuir</a></p><div class="ArticleBody-read-time-and-social-2VOIr"><p class="TextLabel__text-label___3oCVw TextLabel__gray___1V4fk TextLabel__small-all-caps-spaced-out___3O9H4 ReadTime-read-time-1s3CG ArticleBody-read-time-29pGN">5 Min Read</p><div class="SocialTools__container___3rfoZ"><button aria-label="Facebook" type="button" class="SocialTools__icon___MYRE6 SocialTools__facebook___3tojW SocialTools__gray-to-original___1Duya"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 9 16"><path d="M5.8 16V8.7h2.7l.4-2.8H5.8V4c0-.8.2-1.4 1.5-1.4H9V.1C8.7.1 7.8 0 6.6 0c-2.3 0-4 1.3-4 3.8v2.1H0v2.8h2.7V16h3.1z"/></svg></button><button aria-label="Twitter" type="button" class="SocialTools__icon___MYRE6 SocialTools__twitter___1EoE2 SocialTools__gray-to-original___1Duya"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 512 512"><path d="M512.002 97.211c-18.84 8.354-39.082 14.001-60.33 16.54 21.686-13 38.342-33.585 46.186-58.115a210.29 210.29 0 0 1-66.705 25.49c-19.16-20.415-46.461-33.17-76.674-33.17-58.011 0-105.042 47.029-105.042 105.039 0 8.233.929 16.25 2.72 23.939-87.3-4.382-164.701-46.2-216.509-109.753-9.042 15.514-14.223 33.558-14.223 52.809 0 36.444 18.544 68.596 46.73 87.433a104.614 104.614 0 0 1-47.577-13.139c-.01.438-.01.878-.01 1.321 0 50.894 36.209 93.348 84.261 103a105.245 105.245 0 0 1-27.674 3.687c-6.769 0-13.349-.66-19.764-1.888 13.368 41.73 52.16 72.104 98.126 72.949-35.95 28.176-81.243 44.967-130.458 44.967-8.479 0-16.84-.496-25.058-1.471 46.486 29.807 101.701 47.197 161.021 47.197 193.211 0 298.868-160.062 298.868-298.872 0-4.554-.104-9.084-.305-13.59 20.526-14.809 38.335-33.309 52.417-54.373z"/></svg></button></div></div></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">WASHINGTON (Reuters) - 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.</p><div class="RCOMVideo-ratio-container-8AWjC"><div style="background-image:url(undefined)" class="RCOMVideo-observer-placeholder-HFrLD"></div><div class="RCOMVideo-container-Lo9AA"></div></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">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.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">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.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">“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.</p><div class="AdSlot__container___2BqUD ArticleBody-ad-slot-83sCj"><div class="AdSlot__creative___aEugP" id="ad_mpu"></div></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">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.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">The Fed chief was peppered with questions about the president-elect, refusing to comment on his penchant for tweeting about companies or to give advice on how any fiscal, tax or trade plan should be structured.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">“I am not going to offer the incoming president advice about how to conduct himself,” Yellen said.</p><div class="RelatedCoverage-container-3AnSP ArticleBody-related-coverage-7S2f1"><p class="TextLabel__text-label___3oCVw TextLabel__gray___1V4fk TextLabel__small-all-caps___2Z2RG">Related Coverage</p><div class="RelatedCoverage-stories-3WYWt"><div class="StoryItem-container-3jnmn RelatedCoverage-story-37edl"><div class="StoryItem-image-container-3CLqB StoryItem-square-left-23OyK"><a class="TextLabel__text-label___3oCVw TextLabel__gray___1V4fk TextLabel__small-all-caps___2Z2RG StoryItem-image-3HwS8" href="https://www.reuters.com/article/us-usa-fed-yellen-safety/feds-yellen-says-bank-safety-rules-should-be-kept-in-place-idUSKBN1432R0" tabindex="-1"><div><div class="Thumbnail-container-MGAOC" style="height:0;padding-bottom:100.00%"></div></div></a></div><div class="StoryItem-content-19M61"><div class="StoryItem-group-2M6b5"><p class="TextLabel__text-label___3oCVw TextLabel__gray___1V4fk TextLabel__small-all-caps-no-spacing___3Ic1_ StoryItem-title-11vw9"></p><a class="TextLabel__text-label___3oCVw TextLabel__black-to-orange___23uc0 TextLabel__regular___2X0ym StoryItem-headline-CFw0U" href="https://www.reuters.com/article/us-usa-fed-yellen-safety/feds-yellen-says-bank-safety-rules-should-be-kept-in-place-idUSKBN1432R0">Fed's Yellen says bank safety rules should be kept in place</a></div></div></div><div class="StoryItem-container-3jnmn RelatedCoverage-story-37edl"><div class="StoryItem-image-container-3CLqB StoryItem-square-left-23OyK"><a class="TextLabel__text-label___3oCVw TextLabel__gray___1V4fk TextLabel__small-all-caps___2Z2RG StoryItem-image-3HwS8" href="https://www.reuters.com/article/us-usa-fed-yellen-highlights/highlights-fed-chief-yellens-news-conference-after-fomc-meeting-idUSKBN1432MU" tabindex="-1"><div><div class="Thumbnail-container-MGAOC" style="height:0;padding-bottom:100.00%"><div class="Thumbnail-image-3nTD7 AutoSizeImage-container-19DRs" role="img" aria-label="Highlights: Fed chief Yellen's news conference after FOMC meeting" title="Highlights: Fed chief Yellen's news conference after FOMC meeting"></div></div></div></a></div><div class="StoryItem-content-19M61"><div class="StoryItem-group-2M6b5"><p class="TextLabel__text-label___3oCVw TextLabel__gray___1V4fk TextLabel__small-all-caps-no-spacing___3Ic1_ StoryItem-title-11vw9"></p><a class="TextLabel__text-label___3oCVw TextLabel__black-to-orange___23uc0 TextLabel__regular___2X0ym StoryItem-headline-CFw0U" href="https://www.reuters.com/article/us-usa-fed-yellen-highlights/highlights-fed-chief-yellens-news-conference-after-fomc-meeting-idUSKBN1432MU">Highlights: Fed chief Yellen's news conference after FOMC meeting</a></div></div></div></div></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">Trump, critical of Yellen during the campaign and considered likely to replace her when her term ends in early 2018, had not by late afternoon issued any comment about the Fed’s rate decision, in line with his predecessors’ practice.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">Yields on shorter-dated Treasuries hit their highest levels in more than five years and U.S. stocks fell in choppy action. The dollar rose against a basket of currencies. Gold hit its lowest level in more than 10 months and oil prices also declined.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">Partly as a result of the changes anticipated under Trump, the Fed sees three rate hikes in 2017 instead of the two foreseen as of September.</p><div class="AdSlot__container___2BqUD ArticleBody-ad-slot-83sCj"><div class="AdSlot__creative___aEugP" id="mpu_native"></div></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">Yellen called that a “very modest adjustment” driven also by strong job gains and evidence of faster inflation. Wednesday’s rate increase should be “understood as a reflection of the confidence we have in the progress the economy has made,” she said.</p><h2 class="Headline-headline-2FXIq Headline-black-OogpV ArticleBody-heading-3h695">TRUMP IMPACT</h2><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">Fresh economic forecasts, the first since Trump won the Nov. 8 election on promises of tax cuts and increased infrastructure spending, showed policymakers shifting their outlook to one of slightly faster growth, lower unemployment and inflation just under the Fed’s 2 percent target.</p><div><button type="button" class="FullscreenOverlay-button-1FTU6 Slideshow-inline-image-container-1dktB" aria-label="slideshow"><figure><div class="Slideshow-inline-image-1uoB6"><div class="BackdropImage-container-2S9Qf BackdropImage-branding-2hzhO" style="height:0;padding-bottom:65.88%"><div class="BackdropImage-image-a7Ah5 AutoSizeImage-container-19DRs" role="img"></div></div></div><div class="Slideshow-expand-button-2c_q7"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 18 18"><path d="M16.293 1H12.5a.5.5 0 1 1 0-1h5a.5.5 0 0 1 .5.5v5a.5.5 0 1 1-1 0V1.707l-4.146 4.147a.5.5 0 0 1-.708-.708L16.293 1zM1 16.293l4.146-4.147a.5.5 0 0 1 .708.708L1.707 17H5.5a.5.5 0 1 1 0 1h-5a.5.5 0 0 1-.5-.5v-5a.5.5 0 1 1 1 0v3.793z"/></svg></div></figure></button><figcaption class="Slideshow-description-447Md">Slideshow <span>( 3 images )</span></figcaption></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">The projected three rate increases next year would be followed by another three increases in both 2018 and 2019 before the rate levels off at a long-run “normal” 3.0 percent. That is slightly higher than three months ago, a sign the Fed feels the economy is still gaining traction.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">Markets and the Fed appeared to be close on their rate outlooks, with Fed futures markets pricing in at least two and possibly three hikes in 2017.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">The Fed’s policy statement “didn’t mention the fiscal stimulus but typically their aggressiveness does indicate that there’s a little more confidence that they can get away with three hikes next year,” said Aaron Kohli, interest rate strategist at BMO Capital Markets.</p><div class="ArticleBody-slideshow-small-mFJ54"><button type="button" class="FullscreenOverlay-button-1FTU6 Slideshow-inline-image-container-1dktB" aria-label="slideshow"><figure><div class="Slideshow-inline-image-1uoB6"><div class="BackdropImage-container-2S9Qf BackdropImage-branding-2hzhO" style="height:0;padding-bottom:69.23%"><div class="BackdropImage-image-a7Ah5 AutoSizeImage-container-19DRs" role="img"></div></div></div><div class="Slideshow-expand-button-2c_q7"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 18 18"><path d="M16.293 1H12.5a.5.5 0 1 1 0-1h5a.5.5 0 0 1 .5.5v5a.5.5 0 1 1-1 0V1.707l-4.146 4.147a.5.5 0 0 1-.708-.708L16.293 1zM1 16.293l4.146-4.147a.5.5 0 0 1 .708.708L1.707 17H5.5a.5.5 0 1 1 0 1h-5a.5.5 0 0 1-.5-.5v-5a.5.5 0 1 1 1 0v3.793z"/></svg></div></figure></button><figcaption class="Slideshow-description-447Md">Slideshow <span>( 3 images )</span></figcaption></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">The central bank continued to describe that pace as “gradual,” keeping policy still slightly loose and supporting some further improvement in the job market. It sees unemployment falling to 4.5 percent next year and remaining at that level, which is considered to be close to full employment. The economy is projected to grow 2.1 percent in 2017, up from a previous forecast of 2.0 percent.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">U.S. bond yields had already begun moving higher following Trump’s victory and as expectations of the Fed rate increase solidified. All 120 economists in a recent Reuters poll had expected a rate hike on Wednesday.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">In the weeks following the election, Fed policymakers have said Trump’s proposals could push the economy into a higher gear in the short run. Even though the details of the Republican businessman’s plans remain uncertain, Wednesday marked a rare case in which the Fed moved its interest rate outlook higher in the era after the 2007-2009 financial crisis.</p><div class="AdSlot__container___2BqUD ArticleBody-ad-slot-83sCj"><div class="AdSlot__creative___aEugP" id="mpu_lower"></div></div><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">Risks to the outlook remain “roughly balanced” between factors that could slow or accelerate the economy beyond what the central bank anticipates, the Fed said, no change from its assessment last month.</p><p class="Paragraph-paragraph-2Bgue ArticleBody-para-TD_9x">The rate increase was the first since last December and only the second since the crisis, when the Fed cut rates to near zero and deployed other tools such as massive bond purchases to stabilize the economy.</p><div><div class="Attribution-attribution-Y5JpY"><p>Reporting by Howard Schneider; Additional reporting by Lindsay Dunsmuir and Jason Lange in Washington, Ann Saphir in San Francisco and Jonathan Spicer and Karen Brettell in New York; Editing by David Chance and Paul Simao</p></div><div class="TrustBadge-trust-badge-20GM8"><p>Our Standards: <a href="http://thomsonreuters.com/en/about-us/trust-principles.html">The Thomson Reuters Trust Principles.</a></p></div></div></div></article></div><div class="TwoColumnsLayout-right-column-2cOw7"></div></div><div class="TwoColumnsLayout-footer-ErFTG"><footer class="Footer-container-2rD-1"><div class="Footer-inner-3zvCM"><ul class="Footer-site-links-cUR9K" role="site-links"><li class="Footer-site-link-2dpOC"><a href="//www.reuters.com/tools/mobile" class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Apps</a></li><li class="Footer-site-link-2dpOC"><a href="//newslink.reuters.com/join/subscribe" class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Newsletters</a></li><li class="Footer-site-link-2dpOC"><a href="//sales.reuters.com/en/ " class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Advertise with Us</a></li><li class="Footer-site-link-2dpOC"><a href="//www.reuters.com/advertising-guidelines" class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Advertising Guidelines</a></li><li class="Footer-site-link-2dpOC"><a href="https://www.thomsonreuters.com/en/privacy-statement.html#cookies" class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Cookies</a></li><li class="Footer-site-link-2dpOC"><a href="//www.reuters.com/terms-of-use" class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Terms of Use</a></li><li class="Footer-site-link-2dpOC"><a href="https://www.thomsonreuters.com/en/privacy-statement.html" class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Privacy</a></li><li class="Footer-site-link-2dpOC"><a href="javascript:window.OneTrust.ToggleInfoDisplay();" class="TextLabel__text-label___3oCVw TextLabel__gray-to-orange___3Bor1 TextLabel__regular___2X0ym">Do Not Sell My Personal Information</a></li></ul><div class="SocialTools__container___3rfoZ"><button aria-label="Facebook" type="button" class="SocialTools__icon___MYRE6 SocialTools__facebook___3tojW SocialTools__gray-to-original___1Duya"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 9 16"><path d="M5.8 16V8.7h2.7l.4-2.8H5.8V4c0-.8.2-1.4 1.5-1.4H9V.1C8.7.1 7.8 0 6.6 0c-2.3 0-4 1.3-4 3.8v2.1H0v2.8h2.7V16h3.1z"/></svg></button><button aria-label="Twitter" type="button" class="SocialTools__icon___MYRE6 SocialTools__twitter___1EoE2 SocialTools__gray-to-original___1Duya"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 512 512"><path d="M512.002 97.211c-18.84 8.354-39.082 14.001-60.33 16.54 21.686-13 38.342-33.585 46.186-58.115a210.29 210.29 0 0 1-66.705 25.49c-19.16-20.415-46.461-33.17-76.674-33.17-58.011 0-105.042 47.029-105.042 105.039 0 8.233.929 16.25 2.72 23.939-87.3-4.382-164.701-46.2-216.509-109.753-9.042 15.514-14.223 33.558-14.223 52.809 0 36.444 18.544 68.596 46.73 87.433a104.614 104.614 0 0 1-47.577-13.139c-.01.438-.01.878-.01 1.321 0 50.894 36.209 93.348 84.261 103a105.245 105.245 0 0 1-27.674 3.687c-6.769 0-13.349-.66-19.764-1.888 13.368 41.73 52.16 72.104 98.126 72.949-35.95 28.176-81.243 44.967-130.458 44.967-8.479 0-16.84-.496-25.058-1.471 46.486 29.807 101.701 47.197 161.021 47.197 193.211 0 298.868-160.062 298.868-298.872 0-4.554-.104-9.084-.305-13.59 20.526-14.809 38.335-33.309 52.417-54.373z"/></svg></button></div><p class="Footer-disclaimer-2gf0t" role="disclaimer">All quotes delayed a minimum of 15 minutes. 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