While you were sleeping: US rate hike still on the cards

Wall Street climbed after US Federal Reserve policy makers says it sees the economy continuing to gather steam and expects to raise the central bank's key interest rate this year.

"An increase is certainly possible this year," chairwoman Janet Yellen says after a meeting of the Federal Open Market Committee, at which it kept its benchmark rate unchanged.

Fifteen of the 17 FOMC members say they believe it will be appropriate to lift rates in 2015, while two preferred to wait until 2016.

Since the previous Fed meeting in April, "economic activity has been expanding moderately after having changed little during the first quarter," according FOMC. "The pace of job gains picked up while the unemployment rate remained steady."

Fed officials maintained their projection that the benchmark rate would rise to 0.625% in 2015, while dropping it to 1.625% next year -- lower than their March median forecast of 1.875%, according to Bloomberg.

"The Fed is talking about the labour market tightening somewhat, which seems to be a hint that it is a step closer to raising rates," Invesco PowerShares senior equity product strategist Nick Kalivas says. "At the same time, it seems like there is a notching down of the magnitude of rate hike expectations."

Policy makers now expect US gross domestic product to grow between 1.8% and 2.0% in 2015, down from a March projection of between 2.3% and 2.7%. For 2016, the range changed to between 2.4% and 2.7%, from between 2.3% and 2.7% in March.

"They said the economy is back on track, but there's no hint at all of an immediate tightening," LPL Financial Corp chief economic strategist John Canally told Bloomberg. "It looks like there's a shallower rate hike path for 2016 and 2017. That should be supportive of risk assets."

Futures contracts show traders still see December as the first Fed meeting when a rate hike is more likely than not, based on CME FedWatch, Reuters reported. Traders see a 66% chance of a December hike, and a 49% chance of an October hike.

Wall Street moved higher. In late trading in New York, the Dow Jones Industrial Average rose 0.42%, the Standard & Poor's 500 Index added 0.11%, while the Nasdaq Composite Index climbed 0.14%.

Gains in shares of American Express and those of Intel, last trading 1.3% and 0.9% higher respectively, led the Dow higher.

In Europe, the Stoxx 600 Index ended the day with a 0.5% drop from the previous close. The UK's FTSE 100 Index fell 0.4%, Germany's DAX declined 0.6%, while France's CAC 40 Index slid 1%.

Greek Prime Minister Alexis Tsipras says his government is prepared to assume responsibility for rejecting the latest proposal for debt relief for the nation from its international creditors, as he ratchets pressure on those creditors and his euro zone peers to cut Greece some fiscal slack.

(BusinessDesk)