Stocks rise but dollar slides after Federal Reserve raises US interest rates – as it happened

Wall Street is reassured by ‘dovish hike’, as Chair Janet Yellen says the US economy is doing well

8.42pm GMT

That’s all for us for tonight. Here’s our news story about the Federal Reserve rate rise:

The US Federal Reserve has sought to head off rising inflation with a third interest rate rise since the 2008 financial crash and the second in three months, taking the base rate from 0.75% to 1%.

The central bank set aside concerns about the impact of higher interest rates on consumer spending to confirm analyst projections that it is prepared to increase rates several times this year to keep a lid on inflation as it rises above its 2% target level.

Related: US Federal Reserve raises interest rates to 1% in bid to hold off inflation

8.39pm GMT

Caution was the order of the day as the Fed took another step towards normalising monetary policy.

So says our economics editor Larry Elliott, who writes:

The key messages from Janet Yellen on Wednesday were that rates will continue to rise but at a cautious pace. She stressed that the central bank expected the economy to grow at a rate that would warrant gradual increases in interest rates. That will be taken as a hint that there will be two more rises during the course of 2017.

The Fed has now raised interest rates three times in the past 15 months. Clearly, the period of ultra-low borrowing costs is at an end. The so-called normalisation of rates is under way.

Related: US interest rate rise signals end of ultra-low borrowing costs

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US interest rate rise signals end of ultra-low borrowing costs

Will Fed’s steady march to ‘new normal’ scare away the ghosts of financial crisis?

It could have been worse. That was Wall Street’s initial response to the decision by the US Federal Reserve to raise borrowing costs in the world’s biggest economy by a quarter of a point.

For once, the market reaction was entirely rational. The increase in interest rates was expected and it would have been a real surprise had Janet Yellen and her colleagues at the US central bank decided against a move.

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