The U.S. Federal Reserve raised key interest rates by 0.25 percentage point Wednesday, and said it plans to reduce its securities holdings, a move that could spur rates to rise further.
The Fed raised the target range for the federal funds rate from 1 to 1.25 percent, a level that's on par with South Korea's. It was the second time the Fed has raised rates this year after the first hike in March.
"The labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined," the Fed said in a statement after a Federal Open Market Committee (FOMC) meeting.
Household spending has picked up in recent months, and business fixed investment has continued to expand, the Fed said. In addition, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent, it said.
The Fed also announced it will sell off some of the bonds and other securities it's holding.
"The Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated. This program ... would gradually reduce the Federal Reserve's securities holdings," it said. (Yonhap)