Asian shares fall after Fed rate hike, tracking Wall St lead

"And even with some moderation in the pace of job growth, we have a labor market that continues to strengthen". Shares in Southeast Asia were mostly lower.

A Reuters poll of 21 of the 23 primary dealers that do business directly with the Fed showed 14 of them now believed it would announce the start of its balance sheet normalisation at its September 19-20 policy meeting. The plan, which would feature halting reinvestments of ever-larger amounts of maturing securities, did not specify the overall size of the reduction.

The Fed sees the cap for Treasury securities to be $6bn per month initially, increasing in $6bn increments at three-month intervals over 12 months until it reaches $30bn per month. The dollar.DXY was largely flat against a basket of currencies after reversing earlier losses, while the price of gold fell.

Chairwoman Janet Yellen said that pruning the Fed's holdings, built up by some USD3.7 trillion during so-called quantitative easing efforts to spur private investment from 2008-14, is part of a "normalization process" for monetary policy.

Another big issue on the Fed's agenda is doing something to unwind other measures it put in place during and after the financial crisis when bank lending dried up.

Policymakers also released their latest set of quarterly economic forecasts which showed temporary concern about inflation and continued confidence about economic growth in the coming years.

U.S. 10-year yields were last at 2.134 per cent, below their USA close of 2.138 per cent on Thursday, when they fell as low as 2.103 per cent, their lowest since November 10.

"Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely", the Federal Open Market Committee said in a statement Wednesday.

The People's Bank of China (PBOC) did not explain its rationale for keeping rates unchanged, but the yuan currency is on steadier footing and domestic liquidity conditions are much tighter than they were in mid-March, when it followed a Fed hike within hours. The Fed foresees one additional rate hike this year but gave no hint of when that might occur.

The yield for the 2-year note TMUBMUSD02Y, -5.04% the Treasury note most sensitive to changes in Fed policy, fell 7.3 basis points to 1.295%, while the 30-year bond, or the long bond, TMUBMUSD30Y, -2.77% fell 6.8 basis points to 2.798%.

The Bureau of Labour Statistics earlier Wednesday reported that consumer prices fell in May for the second time in three months.

Consensus suggests that there will be a third rate hike this year, but Fidelity International global economist Anna Stupnytska is not so sure.

One FOMC member, Minneapolis Federal Reserve Bank President Neel Kashkari, dissented from the decision, preferring to keep policy on hold for now.

A surprise slowdown in US inflation so far this year is tightening monetary conditions a lot faster than Federal Reserve officials wanted.

The dollar nursed losses on Thursday, after weak US inflation data left investors wondering if the Federal Reserve would be able to follow up its latest rate hike with another later this year.