The widely expected decision raised the federal funds rate to 2.25 % up 25 basis points, with another rate hike expected in December, next year and in 2020.
"It's a particularly bright moment. for the USA economy", Fed Chairman Jerome Powell told reporters. The sharpest losses came from financial stocks, hurt by a drop in Treasury yields, which can crimp lending profits for banks.
But Fed Chairman Jerome Powell said the central bank was hearing a "rising chorus" of concerns from businesses around the country about uncertainty and rising costs, but that the myriad trade conflicts had yet to significantly weigh on U.S. economic data.
The rate hikes, however, continue to draw criticism from President Donald Trump, who suggested Wednesday he would prefer lower borrowing costs.
Credit card rates are most sensitive to changes in the federal funds rate, nearly directly matching the rate change with a 1.92-point increase since late 2015 when the Fed began to hike rates, said Nick Clements, co-founder of MagnifyMoney.com, a financial information website. That would be consistent with the Fed's rate hikes slowing growth to forestall inflation.
But Powell said in the press conference that losing the phrase was not a signal of any change in policy expectations.
Experts are divided on the prospects for the United States outlook, with some seeing low unemployment and improving GDP growth - resulting in continued Fed hikes to keep a rein on credit and ensure that the economy does not overheat.
Analysts expect the central bank to increase the target for the bank's benchmark rate by 0.25%, to a range of 2%-2.25%. Officials have forecast a total of four rate increases this year, followed by three in 2019, amid rising inflation and strong USA hiring. "Household spending and business fixed investment have grown strongly", the Fed said. Powell has tried to downplay this debate saying it's impossible to know precisely what the number is, but as interest rates get closer to that mark, Wall Street is on edge about how much higher the Fed will take rates.
Zhu Jianfang, chief economist at Citic Securities Co., also said in a research note that China is not likely to keep up with the Fed in the fourth quarter, citing the downward pressure on the real economy.
Stock funds should also feel an effect, and emerging-market funds have been among the biggest losers recently. The company reported better earnings for the latest quarter than analysts expected, but growth in rentals fell short of some forecasts. It closed at $17.24, up 43.7 percent.
European markets also rose solidly. The Shanghai Composite Index added 0.9 percent to 2,806.81. It was up 7 points, or 0.3 percent, just before the announcement.
The dollar is steady against major currencies like the euro and yen.
ENERGY: Benchmark U.S. crude rose 68 cents to $72.25 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, added 44 cents to $81.78 per barrel. Brent crude, the worldwide standard, lost 0.6 percent, to $81.34.