Those measures could spur faster growth after a presidential campaign in which Mr. Trump regularly disparaged the economy’s performance under President Obama. But the Fed reiterated Wednesday that the economy is already expanding at roughly the maximum sustainable pace.

Fed officials also see evidence that the labor market is tightening. Several Fed districts reported labor shortages in the central bank’s most recent compilation of economic reports. In the Philadelphia district, construction workers are hard to find. Atlanta reported a shortage of nurses; Kansas City, truck drivers; Dallas, tech workers.

Faster growth, in the Fed’s judgment, would probably lead to higher inflation. As a result, if Republicans succeed in invigorating growth, the Fed is likely to raise rates more quickly. The greater the stimulus, the faster interest rates are likely to rise.

“Your expectation should depend very little on what you think that the F.O.M.C. is thinking and very much on your view of Trump policies and their macro effects,” said Jon Faust, a professor of economics at Johns Hopkins University and a former adviser to Ms. Yellen, referring to the Federal Open Market Committee. “Don’t focus on the Fed. As James Carville regularly reminded the other Clinton on the campaign trail: It’s the economy, stupid.”

Ms. Yellen emphasized that the Fed was not prejudging the likely course of events. She declined several times to comment on the merits of Mr. Trump’s plans or to predict their consequences for the economy.

“We’re operating under a cloud of uncertainty at the moment,” Ms. Yellen said.

Fed officials predicted that they would raise the Fed’s benchmark rate a little more quickly in the coming years, reaching 2.1 percent by the end of 2018. In September, they had predicted that it would reach 1.9 percent by the end of 2018. The new projections, however, reflect a significantly slower pace of increase than last December, when they expected the rate to reach 3.3 percent by 2018.</s>WASHINGTON — The Federal Reserve is raising a key interest rate for the first time in a year, reflecting a resilient U.S. economy and expectations of higher inflation. The move will mean modestly higher rates on some loans.

The Fed is signaling that additional rate increases will likely be made slowly as the economy improves and inflation edges closer to the Fed’s 2 percent target.

The central bank is increasing its benchmark rate by a quarter-point to a still-low range of 0.50 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

President-elect Donald Trump’s plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.</s>WASHINGTON — The Federal Reserve is raising a key interest rate for the first time in a year, reflecting a resilient U.S. economy and expectations of higher inflation. The move will mean modestly higher rates on some loans.

The Fed signaled in a statement Wednesday that additional rate increases will likely be made slowly as the economy improves and inflation edges closer to the Fed’s 2 percent target.

The central bank is increasing its benchmark rate by a quarter-point to a still-low range of 0.5 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

President-elect Donald Trump’s plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.

The economy, after growing at an anemic annual rate of 1.1 percent in the first half of this year, accelerated to a 3.2 percent pace in the July-September quarter. That pickup has lifted hopes that the economy will keep rising, fueled by steady hiring gains. The unemployment rate is at a nine-year low of 4.6 percent.

In the month since Trump’s victory, investors have sent stock prices surging to record highs and driven up bond yields. The markets have calculated that Republican control of Congress will enable Trump to cut taxes, ease regulations and accelerate infrastructure spending — and that higher economic growth, inflation and corporate profits will result.

The Fed’s action Wednesday should have little effect on mortgages or auto and student loans. The Fed doesn’t directly affect those rates, at least not in the short run. But rates on some other loans — notably credit cards, home equity loans and adjustable-rate mortgages — will likely rise soon, though only modestly. Those rates are based on benchmarks like banks’ prime rate, which moves in tandem with the Fed’s key rate.

Mortgage rates have been surging since Trump’s election victory last month on expectations that his economic program will accelerate economic growth and inflation.

Some Fed watchers expect faster growth to lead the central bank to shift its focus from trying to energize the economy to considering ways to counter the risk of too-high inflation. On that assumption, some are revising their forecasts for Fed rate hikes in 2017.

Arvind Menon, CEO of Las Vegas-based community bank Meadows Bank, called the decision a win for retirees living on savings and a hitch for businesses with adjustable loan rates, ones close to the limits of qualifying for a loan and ones hoping to refinance a loan.

For homeowners, fixed-rate loans and ones with lengthier periods before rates are adjusted are still attractive, he said.

Projects in the Las Vegas area already under construction are likely safe to continue because the financing for the projects is locked in, Menon said. For future projects, slow increased by the Fed in 2017 should give businesses time to factor higher interest payments into their plans.

“The rates should go up incrementally, meaning we will not see a big, immediate difference,” Menon said.

The Fed will want to see wages grow before its next interest increases in 2017, said Greg McBride, chief financial analyst for Bankrate, a New York-based financial services company.

The American economy is ready to ease into normal interest rates and that Trump’s election hasn’t disturbed that momentum yet, McBride said. The Fed’s governors will need to see the inflation-stoking policies he proposed on the campaign trail in legislative writing before deciding to raise rates faster, McBride said.

“It’s time to wean the patient off the medicine of near-zero interest rates,” McBride said. “You have to do so gradually so as to not disrupt the recovery.”

Some Fed watchers believe low interest rates could be the new normal, UNLV professor and director of the university’s business and economic research center Stephen Miller said.

Locally, high new house prices compared to existing homes signals the valley economy is still recovering, he said.

But a low national employment rate will continue to tell the Fed that businesses and individuals can handle rate increases.

“The hope is they are staying ahead of the curve,” Miller said.

The Associated Press contributed to this report.</s>WASHINGTON — The Federal Reserve is raising a key interest rate for the first time in a year, reflecting a resilient U.S. economy and expectations of higher inflation. The move will mean modestly higher rates on some loans.

The Fed signaled in a statement Wednesday that additional rate increases will likely be made slowly as the economy improves and inflation edges closer to the Fed's 2 percent target.

The central bank is increasing its benchmark rate by a quarter-point to a still-low range of 0.5 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

President-elect Donald Trump's plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.

The economy, after growing at an anemic annual rate of 1.1 percent in the first half of this year, accelerated to a 3.2 percent pace in the July-September quarter. That pickup has lifted hopes that the economy will keep rising, fueled by steady hiring gains. The unemployment rate is at a nine-year low of 4.6 percent.

In the month since Trump's victory, investors have sent stock prices surging to record highs and driven up bond yields. The markets have calculated that Republican control of Congress will enable Trump to cut taxes, ease regulations and accelerate infrastructure spending — and that higher economic growth, inflation and corporate profits will result.

The Fed's action Wednesday should have little effect on mortgages or auto and student loans. The Fed doesn't directly affect those rates, at least not in the short run. But rates on some other loans — notably credit cards, home equity loans and adjustable-rate mortgages — will likely rise soon, though only modestly. Those rates are based on benchmarks like banks' prime rate, which moves in tandem with the Fed's key rate.</s>Washington: The Federal Reserve has raised a key interest rate in response to a solid US economy and expectations of higher inflation, and it foresees three rate hikes in 2017. The Fed's action Wednesday will mean modestly higher rates on some loans.

The central bank announced after its latest policy meeting that it's increasing its benchmark rate by a modest quarter-point to a still-low range of 0.5 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

The Fed's move, only the second rate hike in the past decade, came on a unanimous 10-0 vote. It also released an updated economic forecast that showed modest changes to its outlook for economic growth, unemployment and inflation, mainly to take account of stronger growth and a drop in the unemployment rate for November to a nine-year low of 4.6 percent.

Its new projection has the unemployment rate dipping to 4.5 percent by the end of 2017 and remaining at that level in 2018.

The Fed foresees economic growth reaching 1.9 percent this year, slightly above its forecast in September, and 2.1 percent in 2017. That's slightly more optimistic than it projected in September.

The Fed kept its long-term estimate for economic growth at 1.8 percent, far below the 4 percent pace that President-elect Donald Trump has said he can achieve with his program of deregulation, tax cuts and increased spending on infrastructure.

The Fed's estimate that it will raise rates three more times in 2017 is up from an estimate of two increases at the September meeting. Its policy statement showed only modest changes in wording from the previous meeting. It said "economic activity has been expanding at a moderate pace since mid-year" helped along by solid job growth.

Trump's plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.

The economy, after growing at an anemic annual rate of 1.1 percent in the first half of this year, accelerated to a 3.2 percent pace in the July-September quarter. That pickup has lifted hopes that the economy will keep rising, fueled by steady hiring gains.

In the month since Trump's victory, investors have sent stock prices surging to record highs and driven up bond yields. The markets have calculated that Republican control of Congress will enable Trump to cut taxes, ease regulations and accelerate infrastructure spending - and that higher economic growth, inflation and corporate profits will result.

The Fed's action Wednesday should have little effect on mortgages or auto and student loans. The Fed doesn't directly affect those rates, at least not in the short run. But rates on some other loans - notably credit cards, home equity loans and adjustable-rate mortgages - will likely rise soon, though only modestly. Those rates are based on benchmarks like banks' prime rate, which moves in tandem with the Fed's key rate.

Mortgage rates have been surging since Trump's election victory last month on expectations that his economic program will accelerate economic growth and inflation.

Some Fed watchers expect faster growth to lead the central bank to shift its focus from trying to energize the economy to considering ways to counter the risk of too-high inflation. On that assumption, some are revising their forecasts for Fed rate hikes in 2017.

Before Trump's victory, the consensus view of economists was for two Fed rate increases next year. Now, some say they foresee three or possibly as many as four. Others think the Fed will be hesitant to step up the pace of rate hikes. For one thing, Trump's economic program still must win congressional approval and could undergo significant change along the way.

Last month after Trump's election, Fed Chair Janet Yellen told a congressional committee that Fed officials would be monitoring Congress' actions and "updating our economic outlook as the policy landscape becomes clearer." Other Fed officials have endorsed that wait-and-see approach.</s>NEW YORK (AP) — U.S. stock indexes slipped Wednesday morning as investors wait for what’s expected to be one of the most telegraphed rate increases in history.

The Federal Reserve is wrapping up a policy meeting this afternoon, and virtually all of Wall Street is forecasting it will raise short-term rates by a quarter of a percentage point. It would be the second rate increase in a year and just the second in a decade.

KEEPING SCORE: The Standard & Poor’s 500 index fell 3 points, or 0.2 percent, to 2,267 as of 10 a.m. Eastern time. The Dow Jones industrial average fell 35 points, or 0.2 percent, to 19,876. The Dow came close to breaching the 20,000 level for the first time on Tuesday. The Nasdaq composite fell 3 points, or 0.1 percent, to 5,460.

CENTRAL BANK MEETING: The Fed has kept short-term interest rates close to zero since the Great Recession in hopes of driving economic growth and averting a downward spiral in prices, a condition that economists call deflation.

The strengthening job market means investors see it as a nearly foregone conclusion that the Fed will announce a rate increase this afternoon. Perhaps more important will be clues about what the Fed sees for the future.

Many investors are forecasting the Fed will raise rates one or two more times in 2017. It’s walking a delicate balance: Higher interest rates make borrowing more expensive, which can slow corporate profits and economic growth, but one of the worst-case scenarios for the economy would be if inflation raced higher because the Federal Reserve was too slow to raise rates.

SPLIT STOCK MARKET: The 11 sectors that make up the S&P 500 were nearly evenly split between winners and losers. Health care stocks rose 0.5 percent to lead the five up sectors. Energy fell 0.9 percent, most among the six down sectors.

Roughly three stocks fell for every two that rose on the New York Stock Exchange.

BOND YIELDS: The yield on the 10-year Treasury note fell to 2.43 percent from 2.47 percent late Tuesday, a reversal from its upward trend over the last month. Interest rates have been climbing since the U.S. presidential election on expectations that inflation and economic growth may be heading higher.

ECONOMIC DATA: Reports released Wednesday offered a mixed picture of the U.S. economy. Retail sales edged up by just 0.1 percent in November, a weaker showing than economists expected.

Inflation at the wholesale level was higher than expected last month, though economists said it still looks fairly tame, while industrial production weakened.

GLOBAL MARKETS: In Europe, Britain’s FTSE 100 dipped 0.1 percent, while Germany’s DAX slipped 0.2 percent and France’s CAC 40 lost 0.5 percent.

In Asia, Japan’s Nikkei 225 finished nearly unchanged at 19,253.61, just a titch above its one-year high close on Tuesday. South Korea’s Kospi and Hong Kong’s Hang Seng index also were up marginally.

COMMODITIES: Benchmark U.S. crude fell 78 cents, or 1.5 percent, to $52.21 per barrel in New York. Brent crude, the international standard, lost 83 cents to $54.89 a barrel in London. Gold rose $6.80, or 0.6 percent, to $1,165.80 per ounce. Silver rose 1.1 percent, and copper added 0.2 percent.

CURRENCIES: The dollar was little changed against many of its rivals. It was virtually flat against the euro and Japanese yen. The British pound rose to $1.2703 from $1.2667.</s>The Federal Reserve on Wednesday will hold its final rate-setting meeting before US presidential-elect Donald Trump takes office. A quarter-point increase in the federal funds rate target range to 0.5 per cent-0.75 per cent has already been priced in by the markets, so the focus will be firmly on what happens to policy in 2017 and beyond.

The key question will be whether the Republicans will add fiscal fuel to an economy that is already near full employment, forcing the Fed to step up its ultra-sluggish pace of tightening. The message from the Fed on Wednesday is likely to be that it is too soon to know for sure.

What will the Fed say?

Markets saw more than a 95 per cent chance of a quarter-point rate increase going into the meeting, according to analysis of futures pricing from CME Group, so anything other than an upward move would be a big shock. Accordingly the markets’ initial focus will be on the Fed’s post-meeting statement, and accompanying forecasts.

The statement is likely to acknowledge the further decline in the unemployment rate to 4.6 per cent as well as the robust 3.2 per cent annual pace of gross domestic product growth seen in the third quarter. One measure of officials’ confidence is whether the Federal Open Market Committee changes its assessment of the risks to the outlook. The November statement found near-term risks were “roughly balanced”; if policymakers are becoming more confident they could extend that outlook beyond the short term, mirroring language in December 2015 when the Fed last lifted rates.

What about the forecasts?

This is critical. The so-called dot plot of policymakers’ interest rate forecasts in September plugged-in two increases for 2017 and three in 2018 and 2019. If there is an upward shift in the median dots in any of those years on Wednesday it could send a shiver through markets.

For most policymakers the outlook may well not have changed sufficiently from September for them to lift their growth, inflation and interest rate forecasts. But some might want to seize on the prospects for more expansionary fiscal policy in the next Congress and boost their rate forecasts – even though no one knows what kind of tax package will emerge from Capitol Hill in 2017.

Mr Trump has mooted a set of tax cuts that would send the US national debt rocketing. Republican politicians are vowing to be more conservative, but they could also end up signing their names to a deficit-increasing package of tax reforms, which could add momentum to the recovery at a time of full employment.

What will Yellen’s message be?

Fed chairwoman Janet Yellen has stressed to Congress that she does not want to jump the gun and make premature assumptions about the post-election shape of economic policy. Accordingly, her message may be characteristically cautious, re-emphasising the Fed’s determination to keep the pace of rate increases gradual.

But assuming the Fed lifts rates on Wednesday, the markets’ focus will be on trying to extrapolate whether the next rate increase comes as soon as the first quarter of 2017 and whether bigger budget deficits could herald a quicker tightening than the glacial, once-a-year pace now. The tone Ms Yellen strikes in the press conference starting at 2:30pm, half an hour after the Fed decision emerges, will be key.

This has been the slowest rate-lifting cycle for the Fed in modern times. Having initially forecast around four rate increases in 2016, the Fed is likely to push through only one. If there is a significant turnround in fiscal policy next year, however, the central bank will have to be quicker on its feet.</s>Mumbai: A sense of nervousness gripped stocks on Thursday as the Sensex dropped 84 points to close at 26,519 trying to figure out the impact of US interest rate hike on India and other emerging markets amid feelers that more are on the cards. This sent the rupee steeply lower by 40 paise to 67.83 against the dollar, which fed the nervous cycle.

The session saw strong spells of volatility amid sustained foreign funds outflows. The quarter percentage point rate increase — the first this year — was a virtual certainty although investors were caught off-guard after the Federal Reserve indicated that the pace of the tightening will be quicker in 2017. The 30-share barometer started on a negative note, fell further but somewhat recovered to end at 26,519.07, down 83.77 points, or 0.31 per cent. It moved between a low of 26,407.58 and a high of 26,737.86. The gauge had lost 95 points in the previous session. The NSE Nifty fell 28.85 points, or 0.35 per cent, at 8,153.60. Intra-day, it hovered between 8,121.95 and 8,225.90.

“The Fed rate hike was in the ballpark, but the outlook is hawkish with three hikes in 2017 against previous estimate of two, which has put pressure on domestic market and rupee,” said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
The Federal Reserve System raises the benchmark interest rate in the United States to a level between 0.5 and 0.75%. This is the second time in a decade that the Federal Reserve has increased interest rates.