From asset holdings of $900 billion before the recession, the Fed ended up expanding its balance sheet to $4.5 trillion. Those figures would rise in increments over a year until they reached $30 billion a month in Treasurys and $20 billion in mortgage bonds.
Mortgage rates likely won't go up, since long-term mortgages aren't tied directly to the federal interest rate. What I'm really interested in, though, is what the Fed plans to do about rates for the rest of the year, as well as how it intends to reduce its balance sheet.
The Fed also issued updated economic forecasts that showed it foresees one additional rate increase this year to follow Wednesday's increase and an earlier rate hike in March. A decline in inflation below 2% also played into the decision to raise rates. They also cut their expectation for 2017 core inflation, which strips out volatile food and energy prices, to 1.7% from 1.9% in their last forecast.
By the end of the year, the Fed projects its benchmark rate will be at a neutral level, neither stimulating nor dampening economic growth. In the longer run, policy makers see the jobless rate at 4.6%, down slightly from 4.7% in March.
Mortgage rates aren't going up immediately. In 2007, as the economy worsened, the benchmark federal funds rate was 5.25 percent.
The decision lifted the USA central bank's benchmark lending rate by a quarter percentage point to a target range of 1.00 percent to 1.25 percent as it proceeds with its first tightening cycle in more than a decade.
Such projections aren't set in stone and reflect how the views of Fed officials have shifted.
When asked if the central bank had taken notice of recent weak inflation readings, Yellen said it had but added that it was "important not to over-react to a few reports, inflation data can be noisy".
Minneapolis Fed President Neel Kashkari cast a dissenting vote Wednesday because he wanted to hold rates steady.
The data comes as the Bank of England ends its own policy meeting Thursday and will put pressure on the policy board to raise rates within its two percent target. Although the dots still imply another hike this year, it may now have to wait until December. But Fed officials have said they think inflation will soon pick up along with the economy. Consumer and business confidence surveys have remained buoyant.
"It is too late for them to move the dots; inflation gets talked about verbally in the press conference", said Michael Gapen, chief USA economist at Barclays Plc and a former Fed researcher. The consumer price index declined in May for the second time in three months, the Labor Department said Wednesday.
The Fed says it expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate.
"It's a Fed day and the markets will likely not blink an eye as the FOMC raises rates by 25 basis points", said Peter Cardillo, chief market economist at First Standard Financial in NY.
Soft inflation numbers are unlikely to prompt a mass retreat by Fed policymakers from their March forecast that there will be three rate rises this year, including the move in March.
Five of the 11 major S&P sectors were lower, with energy declining 2.2 percent as oil prices tumbled after data showed a surprise build in USA inventories.
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