US Federal Reserve raises interest rates amid strong growth

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This decision will be accompanied by an updated summary of economic projections - which includes Fed officials' forecasts for GDP, inflation, and unemployment - and followed by a 2:30 p.m. ET press conference with Fed Chair Jerome Powell.

"The labor market has continued to strengthen ... economic activity has been rising at a strong rate", the Fed said in a statement that removed its longstanding reference to the fact that monetary policy remained "accommodative".

Investors have expected the Fed to increase the federal funds rate a total of four times this year with the next rate hike likely in December.

By removing that language, the Fed may be signalling its resolve to keep raising rates. Did that mean the Fed would shade toward being less aggressive or more? The stock market on Wednesday traded in a capped range ahead of the decision. Trump has complained that raising interest rates works against his efforts to grow the economy at a faster clip.

For comparison purposes, the Bank of Canada's benchmark interest rate sits at 1.5 per cent, but that is also widely expected to rise next month to 1.75 per cent.

In its updated outlook Wednesday, the Fed foresees one final rate hike after 2019 - in 2020 - which would leave its benchmark at 3.4 percent.

Analysts at Rabobank International said, "We would like to add that with recent data indicating that domestic momentum remains strong - the Atlanta Fed's GDP nowcast for Q3 stood at 4.4 per cent on September 19 - it would take time for the trade war to slow United States economic growth down to a pace that would concern the FOMC. I'm not happy about that", Trump told a press conference on the sidelines of the United Nations General Assembly in NY.

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Powell, at his press conference, declined to say whether Fed policymakers had discussed Trump's previous criticism of the central bank.

"We don't consider political factors or things like that", the Fed chief said.

The 0.25 percent hike is the third so far this year, following raises in March and June.

The Fed's latest projections show the economy continuing at a steady pace through 2019, with gross domestic product growth seen at 2.5% next year before it slows to 2.0% in 2020 and to 1.8% in 2021, as the impact of the recent tax cuts and government spending fade.

The Fed's latest forecast predicts that the unemployment rate, now 3.9 per cent, will reach 3.7 per cent by the end of this year and then 3.5 per cent next year.

The jobless rate is now 3.9 percent.

Risks to the current run of economic growth, such as the threat of a damaging round of global tariffs increases, were largely set aside.