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The stock markets in the United States gained after the Federal Reserve indicated any interest rate hike would be gradual as Chairperson Janet Yellen wants to see more definitive evidence of economic growth.

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

During a press conference in Washington, Yellen noted that the "pace of job gains has picked up, and labor market gains have improved further" since the last meeting of the FOMC in April.

Yellen added, "We have seen an increase in the growth rate of the employment cost index, and the growth of average hourly earnings. I would call these tentative signs of stronger wage growth. I think it is not yet definitive, but that's a hopeful sign."

The Federal Reserve released new economic forecasts predicted that the benchmark would increase to 0.625 % this year and to 1.625% next year, lower than their median forecast of 1.875% last March.
Yellen emphasized that the Federal Reserve would not follow a mechanical formula in raising interest rates.

"The committee continues to judge that the first increase in the federal funds rate will be appropriate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium-term," said Yellen.

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