The U.S. central bank raised the key interest rate one-quarter of a point Tuesday in a continuing effort to fend off inflation.
Federal Reserve officials hinted that interest rate hikes will continue in the future at a "measured" pace. It is the tenth time they have raised interest rates since June 2004.
Higher interest rates raise the cost of borrowing money, which policymakers hope will keep economic expansion from going so fast that it sparks damaging inflation.
Fed officials say core inflation has been "relatively low," in recent months, but they are concerned about "elevated" inflationary pressures in the economy.
The rate hike was expected by most economists and investors.
Some information for this report provided by Bloomberg, AP, AFP and Reuters.