Instant View: Stocks pull back after Fed raises rates, points to another hike this year

NEW YORK, Sept 16 (Reuters) - The Federal Reserve raised interest rates on Wednesday and flagged further increases in borrowing costs in coming months, with new US central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation.

Speaking in Washington after the decision's release, Warsh echoed the official statement in promising the Fed's policy committee would "deliver price stability." Stocks and bonds sold off late Wednesday afternoon, reflecting expectations that rates may continue to rise for some time.

New policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year, with only two of them seeing rates remaining stable from here. Warsh apparently again did not submit a rate projection.

It's the first policy shift under the new Fed chief, who took office in late May after being selected by Trump with an expectation that he would cut rates.

The Fed's new policy statement and economic projections, to the contrary, show a central bank opening the door on tighter monetary policy through next year, with the policy rate rising to the 4.00%-4.25% range by the end of this ‌year and ending 2027 at the same level.

STOCKS: Major US indexes turned lower as Warsh's comments came to an end, with the S&P 500 down 1% and the Nasdaq down 0.7%. Both indexes were modestly higher earlier.

BONDS: US Treasury securities were mixed. The 2-year yield, most sensitive to expectations for future Fed policy, rose 7 basis points to 4.732% after earlier declining. The 10-year yield was up 2 bps at 5.012% and the 30-year yield was down 0.5 bps at 5.357%.

FOREX: The US dollar index rose 0.6% to 100.30.

MICHAEL JAMES, MANAGING DIRECTOR, EQUITY SALES TRADING, ROSENBLATT SECURITIES, LOS ANGELES:

"It's similar to what we ‌got in July where everything sold off pretty significantly once Chair Warsh's press conference started. That's what happened again today.

"There were expectations that you were going to get a rate hike, which we got. The issue from an equities standpoint, and the reason things are weaker is because Chair Warsh was pretty vague with a lack of specifics and a lack of real content in the press conference.

"He answered all the questions with the right buzzwords but a lot of it was from a 30,000-foot view. The market wanted to get a better sense of after this rate hike, what should we be expecting going forward.