Atlanta Fed Raises Q-2 GDP Growth View to 3.2%

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Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, July 1, 2016.

Asia-Pacific stocks traded lower as investors took profits in the wake of the USA rate decision, with the Nikkei 225 trading down 0.26 percent and the Hang Seng down 1.20 percent (0952GMT). US yields dropped across the curve on Wednesday and the spread between two and ten-year yields shrank to the lowest levels in over a year.

Analysts in recent weeks have become increasingly doubtful there would be a third rate increase later this year, as inflation, consumption and other economic data have indicated the weakness seen in the first quarter has continued.

Asian market investors may also have been further spooked by the probe on US President Donald Trump, who has been accused of obstruction of justice after he sacked former Federal Bureau of Investigation head James Comey.

"In view of realized and expected labor market conditions and inflation, the (Federal Open Market) Committee made a decision to raise the target range for the federal funds rate to 1 to 1.25 percent", said the Fed in a statement after concluding its two-day monetary policy meeting. The Fed has a 2.4trn portfolio of Treasury bonds and mortgage-backed securities, and a lot of them were in the wake of the financial calamities and slump.

She added that the balance sheet normalization could be put into effect "relatively soon".

"The meeting was definitely tilted towards the hawkish side".

KEEPING SCORE: Japan's Nikkei 225 stock index fell 0.2 percent to 19,838.86 and South Korea's Kospi sank 0.6 percent to 2,358.66.

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The MSCI All-Country World index was up 0.1 percent and has remained stuck in a tight range this month. It fell $1.73, or 3.7 per cent, to settle at $44.73 a barrel in NY.

Worries that policy tightening measures will weigh on China's growth, kept Chinese stocks in check. On the mainland, the Shanghai Composite edged higher by 0.03 percent and the Shenzhen Composite was up by 0.227 percent.

"Long-term Fed expectations remain very much supported".

Even though eurozone growth has been improving, the European Central Bank appeared reluctant to reduce monetary support for the economy, which includes pumping billions of euros into bloc each month. Sterling weakened 0.3 percent to $1.2717 before a Bank of England policy decision expected to leave interest rates at record lows.

The euro was also unchanged at $1.1217, below a seven-month peak of $1.1296 scaled overnight.

The Federal Reserve raised the rate previously in March 2017 to 0.75-1 percent per annum and then kept it at the same level in May.

But the New Zealand dollar skidded 0.8 percent to $0.7213, moving away from the previous session's four-month high of $0.7319. United States crude fell 3.7 per cent to settle at $44.73 per barrel and Brent settled at $47.00, down 3.5 per cent. Spot gold fell 0.2 per cent to $1,263.03 an ounce.

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