USA: Fed raises interest rates, signals more hikes ahead

After weeks of market volatility and calls by President Donald Trump for the Federal Reserve to stop raising interest rates, the U.S. central bank instead did it again, and stuck by a plan to keep withdrawing support from an economy it views as strong.

U.S. stocks and bond yields fell hard. With the Fed signaling "some further gradual" rate hikes and no break from cutting its massive bond portfolio, traders fretted that policymakers could choke off economic growth.

"Maybe they have already committed their policy error," said Fritz Folts, chief investment strategist at 3Edge Asset Management. "We would be in the camp that they have already raised rates too much."

Interest rate futures show traders are currently betting the Fed won't raise rates at all next year.

Wednesday's rate increase, the fourth of the year, pushed the central bank's key overnight lending rate to a range of 2.25 percent to 2.50 percent.

Note EU-Digest: " In New York, U.S. S&P 500 Index lost 1.54 percent to hit its lowest level since September 2017. U.S. stocks are on pace for their biggest December decline since 1931, the depths of the Great Depression ".

Read more: - by Ann Saphir and Howard SchneiderFed raises interest rates, signals more hikes ahead