The Federal Reserve raised interest rates Wednesday by a quarter of a percentage point and signaled that the central bank is on track to raise rates another two times in 2018, while expressing increased confidence in the economic recovery.
The dollar weakened - falling more than half a cent against sterling to hit $1.4130 in the wake of his remarks, as they were seen as more dovish than the markets were expecting. This week, Powell presided over a Fed policy meeting for the first time since becoming chairman. Minutes from the January 30-31 meeting of the Federal Open Market Committee - a gathering that didn't include new economic projections - showed "a number" of policy makers had already upgraded their outlooks for 2018, citing an impact from tax changes "somewhat larger in the near term than previously thought".
There were no dissents to the decision to lift interest rates.
When mortgage payments go up and credit card interest rates spike, something else in the family budget has to give.
US stocks are mixed Wednesday morning as investors wait for news on interest rates from the Fed.
The yield on the benchmark 10-year Treasury note climbed to 2.901% compared to 2.881% on Tuesday. And Fed members have at least one good reason to believe now is the right time: Unemployment is approaching a 50-year low, suggesting that one of our most precious resources might be getting dangerously scarce - namely, spare workers.
The Fed said it expects to increase rates twice more this year. Policy makers continued to project a total of three increases this year.
"Many of the forces that acted as headwinds to USA growth and weighed on policy in previous years are generating tailwinds now", she said earlier this month in a speech pointing to the recent fiscal stimulus from tax cuts and higher spending.
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The central bank is trying to balance a low unemployment rate with the potential for higher inflation. The Dow Jones industrial average was up 140 points, or 0.6 percent; it had been up 210 just before the announcement.
"The Fed is still expecting three rate hikes this year", said Lindsey Bell, investment strategist at CFRA Research. In particular, the Fed has been dead wrong about inflation for the past several years.
A smaller-than-expected uptick in public sector net borrowing for February offered further support to GBP exchange rates, boosting confidence in the underlying health of the United Kingdom economy.
The major US index futures are pointing to a modestly lower opening on Wednesday following the upward move seen in the previous session.
The Dollar needs a "hawkish" tinge to the event considering the pressure the currency finds itself under in preceeding hours; the GBP/USD exchange rate is seen trading higher by 0.45% at 1.4068 while the EUR/USD is up 0.32% at 1.2287. In recent years, the Fed's interest rate hikes have coincided with meetings that include a press conference with the Fed chair.
Federal Reserve Chairman Jerome Powell arrives or a news conference following the Federal Open Market Committee meeting in Washington, Wednesday, March 21, 2018.
Economists say that could change as the drag on the year-over-year figures from a mobile phone plan repricing falls out of the data later this spring.