Major U.S. indexes turned lower as Warsh's comments came to an end, with the S&P 500 .SPX down 0.4% and the Nasdaq .IXIC down fractionally. Both indexes were modestly higher earlier.
U.S. Treasury securities were mixed. The 2-year yield US2YT=RR, most sensitive to expectations for future Fed policy, rose 6 basis points to 4.725% after earlier declining. The 10-year yield US10YT=RR was up 1 bps at 5% and the 30-year yield US30YT=RR was down 1.6 bps at 5.347%.
The U.S. dollar index =USD rose 0.5% to 100.25.
Fed raises rates and signals more tightening
NEW YORK, Sept. 16 (Reuters) - The Federal Reserve raised interest rates on Wednesday and flagged further increases in borrowing costs in coming months, with new U.S. central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation.
Speaking in Washington after the decision's release, Warsh echoed the official statement in promising the Fed's policy committee would "deliver price stability."
New policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year, with only two of them seeing rates remaining stable from here. Warsh apparently again did not submit a rate projection.
It's the first policy shift under the new Fed chief, who took office in late May after being selected by Trump with an expectation that he would cut rates.
The Fed's new policy statement and economic projections, to the contrary, show a central bank opening the door on tighter monetary policy through next year, with the policy rate rising to the 4.00%-4.25% range by the end of this year and ending 2027 at the same level.
Wall Street strategists see a hawkish message
Michael Gapen, chief U.S. economist at Morgan Stanley, said the Fed's move and projections signaled that policymakers still believe inflation will come down next year, but that it will take a higher policy rate to get there.
Several other strategists described the decision as hawkish and said the unanimous vote showed greater alignment within the Fed than markets had anticipated. Some said the market reaction was muted because the 25-basis-point hike had largely been priced in.
Others said the bigger question is what comes next, with some expecting another hike as soon as December if inflation pressures persist, while others said the decision could prove to be a one-off if inflation slows more quickly than expected.
SPY•
