They forecast United States economic growth of 2.2 per cent in 2017, an increase from the previous projection in March. When officials raised rates in March, the Fed's preferred inflation measure, released by the Commerce Department, showed prices excluding food and energy had risen 1.8% over the year ended February, matching the strongest reading in almost five years. The Fed's target for inflation is 2 percent. Energy was dragged lower by falling crude prices, which were pressured by a smaller-than-expected drawdown in US oil inventories.
Policymakers also released their latest set of quarterly economic forecasts which showed temporary concern about inflation and continued confidence about economic growth in the coming years.
It represents only the fourth upwards move in the federal funds rate since before the financial crisis, as the world's most important central bank takes a cautious approach to the "normalisation" of monetary policy.
After leaving its benchmark rate at a record low near zero for seven years, the Fed has raised rates three times, by a quarter-point each time - once in December 2015, again last December and a third time in March.
The Fed's decision to raise rates, announced in a statement after its latest policy meeting, was approved 8-1, with Neel Kashkari, head of the Fed's Minneapolis regional bank, dissenting in favor of holding rates unchanged.
Israel pushes ahead with plans for 3000 settlement homes
The UK should no longer be party to this", Amnesty's Kate Allen said. Abbas says Israel also incites against the Palestinians. They live alongside some three million Palestinians.
US equities traded mixed on Wednesday after the Federal Reserve raised interest rates for the second time this year. The Fed largely shrugged off softer economic data in the May meeting statement, and markets will be tuning in for any change to this language, as well as any adjustment to the Fed's inflation outlook given that market-based inflation expectations have decreased slightly over the past month.
The Australian dollar AUD= rose 1.3 percent to its highest against its US counterpart since April 3.
Yellen indicated the Fed still remained confident inflation would rise to its target over the medium term, bolstered by what she described as a robust labour market that is continuing to strengthen.
Before the release of Wednesday's statement, traders in future markets placed only a 37% probability of one more rate increase this year, according to CME Group, and an 18% probability of a second quarter-point increase by mid-2018.
Assuming a strong retail sales and consumer price inflation report Wednesday morning, before the Fed's policy announcement, Yellen will be hard-pressed to justify with a straight face the dramatic lowering of rate hike estimates Wall Street wants to see.
And the most important pillar of the economy the job market remains solid if slowing, with employment at a 16-year-low of 4.3 percent even below the level that the Fed associates with full employment.