Wall Street stocks dropped Wednesday and the dollar rose against most major currencies after the Federal Reserve increased interest rates and signaled it expects to keep lifting rates gradually.
The Fed, as expected, boosted the lending rate to 2.0 percent to 2.25 percent, saying the labor market has continued to strengthen and economic activity has been rising at a strong rate.’  
US stocks were in positive territory most of the day, including during Powell’s press conference. But the market tumbled into the red in the final minutes following Powell’s appearance, a sudden change in direction that is not unusual on the day of Fed decisions.
Earlier, European and Asian markets rose.
The Fed announcement ‘was pretty well telegraphed,’ said JJ Kinahan, chief market strategist at TD Ameritrade, told AFP.
On Twitter, Kinahan said the Fed’s shift in policy direction from one of loose money made sense in that ‘the market just doesn’t seem to need so much support now.’  
The dollar rose against the euro and the pound, but retreated against the yen, with analysts saying the US central bank could have adopted a more aggressive tone on monetary policy.
Instead, the central bank continued to signal it plans ‘gradual’ rate hikes in the future, signaling in its forecasts three increases in 2019.
‘Investors were hoping for unambiguously hawkish comments from the Fed Chair and while he had a lot of good things to say, the mere mention of the possibility of rate cuts capped the rally,’ said BK Asset Management Kathy Lien.
‘According to Powell, if inflation surprises to the upside, they could move faster but if the economy slows they would probably cut rates,’ Lien said, adding that ‘the risk of easing is minimal.’
But as the meeting takes place under the cloud of rising global trade tensions, Powell said the central bank was hearing a ‘rising chorus’ of concerns from businesses around the country about uncertainty and rising costs.
While the myriad trade conflicts had yet to significantly weigh on US economic data, they could lead to rising prices, he said.
Regarding adverse impacts of Fed decisions on emerging economies, Powell said the US central bank makes extra effort to be transparent in communicating its moves to markets.
‘We do understand, though, that when our economy is strong and we’re raising rates, that puts upward pressure around the world and can affect countries, particularly countries that have external dollar borrowing,’ Powell told reporters at a news conference. 
Key figures around 2100 GMT
New York – Dow Jones: DOWN 0.4 percent at 26,385.28 (close)
New York – S&P 500: DOWN 0.3 percent at 2,905.97 (close)
New York – Nasdaq: DOWN 0.2 percent at 7,990.37 (close)
London – FTSE 100: UP 0.1 percent at 7,511.49 (close)
Frankfurt – DAX 30: UP 0.1 percent at 12,385.89 (close)
Paris – CAC 40: UP 0.6 percent at 5,512.73 (close)
EURO STOXX 50: UP 0.4 percent at 3,433.15 (close)
Tokyo – Nikkei 225: UP 0.4 percent at 24,033.79 (close)
Hong Kong – Hang Seng: UP 1.2 percent at 27,816.87 (close)
Shanghai – Composite: UP 0.9 percent at 2,806.81 (close)
Euro/dollar: DOWN at $1.1743 from $1.1767 at 2100 GMT
Pound/dollar: DOWN at $1.3169 from $1.3184
Dollar/yen: UP at 112.74 yen from 112.97 yen
Oil – Brent Crude: DOWN 53 cents at $81.34 per barrel
Oil – West Texas Intermediate: DOWN 71 cents at $71.57