Instant view: Analysts react to fed rate hike

NEW YORK (Reuters) - The U.S. Federal Reserve raised interest rates on Wednesday, as expected, and left its monetary policy outlook for the coming years largely unchanged amid steady economic growth and a strong job market.

In a policy statement that marked the end of the era of “accommodative” monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 percent to 2.25 percent. It still foresees another rate hike in December, three more next year, and one increase in 2020.

Comments:

JUAN PEREZ, SENIOR CURRENCY TRADER, TEMPUS INC, WASHINGTON

“I feel that the Fed is doing exactly as Jerome Powell has telegraphed: the economy does not need the Fed’s intervention and removing “accommodating or need to maintain accommodative environment” is a sign that points at confidence in laissez-faire moving forward.”

“The QE, the lowering of rates, the need to influence markets, can be put aside and this goes with our dollar narrative as well: hikes and a strong economy for the U.S. have already been priced-in by traders, but now let’s see if trade tensions are long-term and if hiking rates is indeed sustainable.”

“These doubts along with momentum building on the other side of the Atlantic are factors negatively impacting the buck. Dollar doesn’t need to sink, but it will not keep being propelled by what’s been common thus far this year. The safe-haven status may fade as a source of strengthening.”

MARKET REACTION:

STOCKS: The S&P 500 .SPX extended gains and was last up 0.46 percent. The Dow .DJI also rose further and was last up 0.36 percent. BONDS: The 10-year U.S. Treasury note US10YT=RR yield initially slipped then rose to 3.0815 percent and the 2-year yield US2YT=RR eased then went flat at 2.8269 percent. FOREX: The dollar index .DXY initially erased a slight gain then firmed to trade up 0.06 percent.

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