Fed Hikes Interest Rates, Yields React with Modest Decline

The US Federal Reserve raised interest rates for the first time in three years on Wednesday, with a 25 basis point hike to a target range of 3.75%-4%.

Treasury yields reacted by edging lower, with the benchmark 10-year Treasury yield dropping more than 6 basis points to 4.943%, and the 30-year Treasury yield down over 4 basis points at 5.301%.

Fed Chairman Kevin Warsh said during a press conference that inflation has been 'too high ... for too long', and that underlying inflation must move towards the Fed's objective clearly and at sufficient speed.

The dot-plot grid of individual officials' expectations indicated that 16 of the 18 participants expect another rate increase, with four seeing two more hikes as a possibility.