Zürcher Nachrichten - US stocks fall, dollar gains after Fed lifts interest rates

A rate increase had been widely anticipated, but markets judged the central bank's overall message as more hawkish than expected after a majority of Fed policymakers penciled in at least one more rate hike before the end of 2026.

All three major US stock indices finished lower, with the broad-based S&P 500 down 0.5 percent.

The dollar advanced against the euro and other major currencies, while increases in Treasury yields indicated that the market believes from Fed Chair Kevin Warsh's commentary that "the inflation fight isn't a one-and-done rate-hike kind of thing," said Briefing.com.

"The remarks have reinforced the view that today's rate hike may not be an isolated move, with investors focused on the possibility that persistent inflation pressures could require additional tightening in the months ahead."

The US central bank's Federal Open Market Committee voted unanimously to raise rates to between 3.75 and 4.00 percent, citing "elevated" inflation and adding that the rate hike would support a "timelier return" to its two-percent target for the metric.

Warsh, who was appointed by US President Donald Trump, said the decision was a "serious" one, but needed to be taken.

"The plain fact is that inflation is too high, and has been for too long," he told a press conference.

But Warsh's move may spark blowback from Trump, who relentlessly criticized former Fed chair Jerome Powell over rate decisions. Trump has also launched an unprecedented assault on the Fed's independence since taking office, attempting to fire a Fed governor and promoting a criminal probe against Powell.

Following the Fed's announcement, White House spokesperson Kush Desai said the decision was "rather unfortunate" and that Trump had been clear that he wanted lower interest rates.

Earlier, bourses in Europe had gotten a lift as oil prices dropped after a US industry report pointed to a pickup in stockpiles.

Analysts also pointed to talk that an outage of a key pipeline for Saudi oil may be resolved in a matter of days.

The Fed's decision will be followed on Thursday by the Bank of England, which is expected to leave its benchmark rate unchanged as weak UK economic growth offsets high inflation.

Official data Wednesday showed UK annual inflation remained above the BoE's two-percent target, reaching 3.1 percent in August on surging fuel prices.

The Bank of Japan is expected to hike rates on Friday owing to rising inflation and the need to maintain support for the yen.

Investors are also watching a planned summit between Trump and his Chinese counterpart Xi Jinping, with reports that they could agree to some tariff reductions.

- Key figures at around 2020 GMT -

Brent North Sea Crude: DOWN 2.7 percent at $105.83 per barrel

West Texas Intermediate: DOWN 3.2 percent at $102.43 per barrel

New York - Dow: DOWN 1.2 percent at 51,461.90 (close)

New York - S&P 500: DOWN 0.5 percent at 7,551.81 (close)

New York - Nasdaq Composite: DOWN less than 0.1 percent at 25,978.42 (close)

London - FTSE 100: UP 0.3 percent at 10,688.47 (close)

Paris - CAC 40: UP 0.6 percent at 8,140.59 (close)

Frankfurt - DAX: UP 0.5 percent at 25,537.75 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 63,923.00 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 24,713.78 (close)

Shanghai - Composite: UP 0.7 percent at 3,891.60 (close)

Euro/dollar: DOWN at $1.1464 from $1.1544 on Tuesday

Pound/dollar: DOWN at $1.3377 from $1.3478

Euro/pound: UP at 85.69 pence from 85.64 pence

Dollar/yen: UP at 156.37 from 155.10 yen

M.J.Baumann--NZN