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Stocks plunged and yields on short-dated United States Treasuries rose after the Federal Reserve lifted interest rates for the first time since 2023 and forecast further action to rein in inflation.
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The Dow Jones industrial Average tumbled more than 850 points after the announcement, with the Nasdaq down 123 and the S&P 500 shedding 63 points. Canada’s TSX index was also down more than 300 points
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Two-year yields climbed to touch 4.73 per cent, the highest since 2024 and more than 10 basis points above the level seen before the meeting. Longer-term Treasuries trailed the move, with the 10-year yield remaining lower on the day at 4.97 per cent.
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The hike itself was widely expected, with markets instead taking their cue from quarterly projections in which officials signalled growing support for further tightening. Traders added to bets on another Fed rate increase this year, nearly pricing in three hikes by the middle of 2027.
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