The U.S. dollar slid against major currencies, bond yields slipped, and stocks were mostly steady on Wednesday after the Federal Reserve raised its policy interest rate, and noted economic growth was strengthening, but left markets expecting only three rate rises this year.
Wednesday's rate hike is the sixth time the Fed has lifted interest rates since the economy collapsed in 2008.
"In view of realized and expected labor market conditions and inflation, the Committee chose to raise the target range for the federal funds rate to 1-1/2 to 1-3/4%".
"Chairman Powell's reiterating of the Fed's accelerating pace of this unwind is a reminder that real yields are likely to normalize, and yields of 4% or higher on the U.S. ten year treasury might not be so far away", Hyman said. It had risen as high as 2.93 percent as investors expected quicker gains in interest rates.
Wednesday's statement showed only minor changes from the text the Fed had issued in January after Yellen's final meeting.
Voting for the FOMC monetary policy action were Jerome H. Powell, Chairman; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Randal K. Quarles; and John C. Williams.
Fed officials say they expect to see inflation move up closer to their 2% target this year. And Levy wonders, "will the stronger economic momentum generate overheating" and push inflation too high?
Interest rates on home equity credit lines are lower, at around 5 percent.
"That's a Fed that really feels good about the economy, not only this year but into next year", said Jim Paulsen, Chief Investment Strategist at The Leuthold Group in Minneapolis.
In February, 313,000 jobs were added to the economy - the biggest increase in 1 1/2 years - and the unemployment rate held steady at 4.1 percent. At the same time, it increased its estimate for rate hikes in 2019 from two to three, reflecting more optimistic expectations for solid growth and low unemployment.
In its statement, the Fed said the labor market "has continued to strengthen and that economic activity has been rising at a moderate rate".
The U.S. dollar index.DXY, which tracks the greenback versus a basket of six currencies, fell 0.693 points or 0.77 percent, to 89.678, its steepest one-day drop since January 24 when it fell 1.0 percent. But he said trade policy "has become a concern" for business leaders a round the country. Since the last meeting in December, Congress passed a $3.5 billion tax cut and a two-year, $300 billion funding increase.
Members of the Federal Open Markets Committee, which votes on rates, predicted the U.S. economy will grow by 2.7% this year, faster than the 2.5% predicted in December.
"It's not something we observe at the present", Powell said.
A healthy job market and a steady if unspectacular economy have given the Fed the confidence to think the economy can withstand further increases within a still historically low range of borrowing rates.