Fed opts for small rate hikes, expects to deliver 'ongoing increases'

NEW YORK (Reuters) - The Federal Reserve raised its target interest rate by a quarter of a percentage point on Wednesday, yet continued to promise "ongoing increases" in borrowing costs as part of its still unresolved battle against inflation.

The decision lifted the benchmark overnight interest rate to a range between 4.50% and 4.75%, a move widely anticipated by investors and flagged by U.S. central bankers ahead of this week's two-day policy session.

MARKET REACTION:

STOCKS: U.S. stocks fell after the Fed statement.BONDS: U.S. Treasury yields trimmed losses after the Fed decision; 10-year last at 3.484%.FOREX: The U.S. dollar pared losses after the Fed statement.

COMMENTS:

RYAN DETRICK, CHIEF MARKET STRATEGIST, CARSON GROUP, OMAHA

"The Fed threw no curve balls, as they did what was widely expected. The door is cracking open to end rate hikes, but they still have a chance for one more rate hike at the next meeting."

"The economy is still growing, which is comforting as (the Fed is) not worried of an impending recession."

"Investors should be happy that we likely have a Fed that is going to end hikes fairly soon as the inflation data continues to show major improvements, which is exactly what the Fed needs to take their foot off the pedal."

"Yesterday's Employment Cost Index was an improvement, and Powell said he needed to see employment costs improve before he stops hiking rates. How close are we now with ending the rate hike cycle, when it's clear employment costs are slowing?"

(Compiled by the Global Finance & Markets Breaking News Team)