Declaring that "political considerations play no role whatsoever in our discussions or decisions about monetary policy," the U.S. Federal Reserve went ahead and raised its benchmark interest rate a quarter-point but lowered its projections for future hikes in 2019.
The Fed increased the target range for its benchmark overnight lending rate by one-quarter point on Wednesday to between 2.25 percent to 2.5 percent. The Fed did, however, reduce its 2019 outlook for rate hikes to just two increases from the previous three.
The hike was the fourth increase this year and the ninth since the Fed began normalizing rates in December 2015. The Fed's move came despite President Donald Trump's tweets against the rate hikes.
On Monday, Trump tweeted "it is incredible" that "the Fed is even considering yet another interest rate hike."
In a retort, Fed chairman Jerome Powell replied it's "always going to be focused on the mission that Congress has given us," which means the Fed gives no weight to Trump's rantings.
The Fed's Federal Open Market Committee (FOMC), which sets rates, judges that some further gradual increases in the target range for the federal funds rate "will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term."
The only change from the post-meeting statement to the November meeting was adding "some" to describe the trajectory of future rate moves. FOMC said it now "judges" rate increases to be appropriate while it said "expects" in November.
Wall Street, however, took a dim view of the Fed rate hike. U.S. stocks plummeted Wednesday in a wild session after the Fed raised its overnight lending rate.
The benchmark Dow Jones Industrial Average fell 351.98 points and closed at its lowest level so far this year at 23,323.66. The plunge erased a 380 point improvement prior to the Fed decision.
The small-cap S&P 500 closed at a 2018 low, falling 1.5 percent to finish at 2,506.96 with technology and banks stocks leading the rout. The NASDAQ Composite fell 2.1 percent to 6,636.83.
All the major indices also hit intraday lows for the year, an unnerving reminder of the extreme volatility besetting the equity markets.
The Dow and S&P 500, which are both in correction, are set for their worst December performance since the Great Depression in 1931. They're down more than 8 percent and 9 percent, respectively, this month. The S&P 500 has fallen 6.3 percent in 2018 thus far. The Dow has over 1,250 points this week alone.
