US Fed raises benchmark interest rate to 2.25-pct

It was the third rate hike by the US Fed this year and the eighth such move since December 2015.

With the United States economy still strong, the Federal Reserve raised the benchmark interest rate on Wednesday for the third time this year but showed no indication it would be more aggressive in efforts to head off inflation. The benefits of this strong economy have not reached all Americans. "Most FOMC participants now agree that this makes little sense - the Fed has some catching up to do".

"Unfortunately, they just raised interest rates", Mr Trump said at a press conference in NY, where he was attending the annual United Nations General Assembly.

"The Fed stuck to script today, pushing ahead with another rate hike", said Michael Pearce, senior USA economist at Capital Economics.

The statement on the unanimous decision no longer describes the interest rate level as "accommodative", but Powell stressed that that was not an indication of a change "in the path of policy".

The PBOC had followed a Fed hike in March by bumping up its short- and medium-term rates, but held its fire in June despite US tightening.

But analysts say the central bank is tangling with a complex set of near-term questions - a China trade battle affecting hundreds of billions of dollars in goods that is likely to be inflationary; tax cuts and fiscal stimulus late in the economic recovery; and dizzyingly high asset prices alongside more or less stagnant wage growth despite historically low unemployment.

Earlier, Powell said during his news conference that such outside criticism would have no effect on the Fed's use of rates to try to maximize employment and stabilize prices.

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Inflation was forecast to hover near 2 percent over the next three years, while the unemployment rate is expected to fall to 3.5 percent next year and remain there through 2020 before rising slightly in 2021.

The central bank is mandated by Congress to work toward the goals of stable prices and maximum employment, and its structure is created to insulate decision-making from politics. The Fed sees the economy's long-run growth at a 1.8 per cent annual rate - far below the Trump administration's projections for a sustained rate of 3 per cent.

Powell and his colleagues are trying to engineer a soft landing for the U.S. economy, now enjoying its second-longest expansion on record, by raising rates just enough to prevent overheating, but not so much that they trigger a recession. The tariffs and counter-tariffs that have been imposed on imports and exports are having the effect of raising prices for some goods and supplies and potentially slowing growth.

"This is a pretty good moment for the US economy", he said. The Fed would normally respond to weaker growth by cutting interest rates. And U.S. consumers in general are relatively safe because their most unsafe asset, housing, was part of a bubble that popped more than a decade ago.

On the brighter side, Powell said he did not see any "troubling" vulnerabilities in financial markets, even with stocks near their historic highs in some cases.

Indeed, the Fed's regional banks have reported that some businesses are delaying investments until they see some resolution to the trade hostilities.

"It's a concern", Powell said. "It's a risk. You could see prices moving up".

The Fed is working to get things "just right so you don't overheat but you don't cause a recession", he said. "The tariffs might provide a basis for companies to raise prices in a world where they've been very reluctant to and unable to raise prices".

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