The U.S. Federal Reserve on Wednesday raised the benchmark interest rates for the fourth time since December 2015, and unveiled a plan to start trimming its balance sheet.
"In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1.25 percent," said the Fed in a statement after concluding its two-day monetary policy meeting.
The U.S. central bank acknowledged the continuous progress in labor market while expressing its concerns over weak inflation.
Fed officials lowered their forecast for unemployment rate for 2017 down to 4.3 percent, compared with the 4.5 percent projection made in March.
Fed officials expected the economy to grow 2.2 percent this year, compared with their forecast of 2.1 percent in March.
In view of the stable economic conditions, the Fed plans to reduce its 4.5-trillion-U.S.dollar balance sheet later this year and unveiled the detailed plan to trim its bond holdings.
According to the plan, the Fed will set a set of gradually increasing caps on the amount of the Treasury and agency securities that would be allowed to run off each month. The caps will be increased every three months until they reach fully phased-in levels.
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