The U.S. central bank raised a key interest rate one-quarter of a percent (to 2.25) Tuesday in a bid to fend off future inflation.
It is the fifth time since June that Federal Reserve officials have raised rates in a campaign to tighten credit at a "measured" pace.
Raising interest rates increases the cost of borrowing, which slows economic growth and helps curb inflation.
Earlier, Fed officials had cut rates to 40-year lows in an effort to help boost the U.S. economy out of an economic slump.
Many economists now predict the Fed will continue gradually raising interest rates until they reach a "neutral" level where they neither stimulate nor slow U.S. economic growth.
Some information for this story provided by AP and Reuters.