2017.12.1323:00:00UTC+00Fed Lifts Rates, Retains 2018 Policy Outlook

The U.S. Federal Reserve raised federal funds rate on Wednesday but maintained its outlook for the coming years even as central bank officials predicted a short-term surge in U.S. economic growth from the Trump administration's proposed tax code revamp.

Members of the Federal Open Market Committee announced they would hike the benchmark rate by a quarter percentage point to a range between 1.25 percent and 1.5 percent. Officials also lifted their estimates for economic growth and said they anticipate to keep raising rates if the economy performs in line with their expectations.

The FOMC did not significantly adjust projections regarding the path of interest rates or inflation despite their brighter outlook for the economy and their positive view that the labor market will tighten further than they projected three months ago.

Officials penciled in three quarter-percentage point rate hike for 2018, unchanged from their projections in September, and two interest rate increases in 2019 and 2020.

New projections shows the Fed anticipates the economy to rise at a 2.5 percent rate this year and in 2018, higher from the September projections of 2.4 percent and 2.1 percent respectively.

Speaking after the two-day policy meeting, Fed Chair Janet Yellen said that the economy is performing well and noted that its growth is not fueled by an unsustainable rise in debt. She also noted the health of the global economy.