Fed raises interest rates by 25 bps as US economy rolls on

The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday, as anticipated, but left its rate outlook for the coming years unchanged even as policymakers projected a short-term acceleration in US economic growth.

The move, coming at the final policy meeting of 2017 and on the heels of a flurry of relatively bullish economic data, represented a victory for a central bank that has vowed to continue a gradual tightening of monetary policy.

Having raised its benchmark overnight lending rate three times this year, the Fed projected three more hikes in each of 2018 and 2019 before a long-run level of 2.8 per cent is reached. That is unchanged from the last round of forecasts in September.

"Economic activity has been rising at a solid rate ... job gains have been solid," the Fed's policy-setting committee said in a statement announcing the federal funds rate had been lifted to a target range of 1.25 per cent to 1.50 per cent.

Fed Chair Janet Yellen is due to hold a press conference at 2:30 p.m. ET (1930 GMT).
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