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Bailey McCann, Opalesque New York:

As expected the US Federal Reserve raised its benchmark interest rate to a range of 1 percent to 1.25 percent. In addition to the rate rise, the Fed also released a plan to trim its $4.5 trillion balance sheet. The moves will raise borrowing costs for businesses after almost a decade of ultra-low interest rates.

Markets reacted calmly to the news. Many investors had already priced in a rate rise and news that the Fed would expand its tapering program had little impact.

"With two hikes out of three or four expected for 2017, this hints at a summer break before hiking once more," said Antoine Lesné, EMEA head of ETF strategy at SPDR ETFs, part of State Street Global Advisors, of the Fed's move. "We would probably wait for more clarity on the Fed's balance sheet winding down program by September and another hike in December." Lesné added that the rate increase could bolster interest and performance from emerging markets.

The Fed's decision to start limiting its bond buying program is another signal that officials think the economy is strong. In its statement announcing the rate rise, the FOMC said economic data shows inflation and employment are progressing within target ranges. That could slow - the most recent jobs report was a bit weak in spots - but market participants seem to be welcoming of the news. "Although this is likely to be a gradual process, balance sheet reduction should give it some additional room for m......................

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