Both inflation and productivity growth are sluggish, which suggests wages should be as well.
Fed policymakers will also release their quarterly economic projections after the meeting.
Voting for the FOMC monetary policy action were Jerome H. Powell, Chairman; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Randal K. Quarles; and John C. Williams.
"We suspect the Fed is leaning on the mixed inflation data in wages along with the escalating risks of a trade war to buy some time before making material changes to their rate forecast", said Charlie Ripley, senior investment strategist for Allianz Investment Management. But after rate hikes, gold prices tended to drop since rising interest rates typically make non-yielding bullion less attractive.
Some investors had speculated that Powell might move to impose his mark on the central bank by signalling a faster pace of rate hikes for 2018.
Bank stocks rose following news that the Federal Reserve had raised interest rates. The yield on the 10-year Treasury note, a benchmark for mortgages and other loans, declined to 2.88 percent from 2.90 percent Tuesday. The Fed's GDP projection for the year seems to be headed for an upward revision.
Interest rates on home equity credit lines are lower, at around 5 percent. Since it began bumping up rates back in 2015, the Fed has now made six increases. In fact, Powell told Congress recently that, in his personal view, the economy has strengthened since December, when Fed officials last updated their forecasts for the economy.
The median estimate for economic growth this year rose to 2.7 per cent from 2.5 per cent in December, signaling confidence in USA consumers despite recent weak readings on retail sales that have pushed down tracking estimates of first-quarter activity.
The Fed announced it will raise the benchmark Fed funds rate to a range between 1.5% and 1.75%.
The central bank is trying to balance a low unemployment rate with the potential for higher inflation.
The Fed has previously indicated that it sees three rate hikes this year, but since then President Trump's tax reforms have provided an additional tailwind for the economy, which could lift inflationary pressures and mean monetary tightening could come a little quicker. The Fed's preferred measure of inflation was expected to end 2018 at 1.9 percent, unchanged from the previous forecast, but it is seen rising a bit above the Fed's target next year. In particular, the Fed has been dead wrong about inflation for the past several years.
"Either the market does not believe the Fed and will pay a price, or the Fed is seriously overestimating the underlying strength in the economy". ARM rates are modified annually, so a 0.25 percentage point increase in the rate in March wouldn't have an immediate effect.
The major USA index futures are pointing to a modestly lower opening on Wednesday following the upward move seen in the previous session. In recent years, the Fed's interest rate hikes have coincided with meetings that include a press conference with the Fed chair. Still, she said, "We will need to be vigilant" because a booming economy can lead to a relaxation in lending standards.