The US Federal Reserve has raised interest rates and left intact its plans to steadily tighten monetary policy, as it forecast that the US economy would enjoy at least three more years of growth.
In a statement that marked the end of the era of "accommodative" monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 per cent to 2.25 per cent.
The US central bank still foresees another rate hike in December, three more next year, and one increase in 2020.
That would put the benchmark overnight lending rate at 3.4 per cent, roughly half a percentage point above the Fed's estimated "neutral" rate of interest, at which rates neither stimulate nor restrict the economy.
That tight policy stance is projected to stay level through 2021, the time frame of the Fed's latest economic projections.
"The thing that folks were watching for, which they went ahead and did, was remove the word 'accommodative' in regard to their monetary policy," said Michael Arone, chief investment strategist at State Street Global Advisers.
"It does seem to potentially indicate they believe monetary policy is becoming less accommodative and getting more towards that neutral rate."
Fed Chairman Jerome Powell said the removal of the wording, which had been a staple of the central bank's guidance for financial markets and households for much of the past decade, did not signal a policy outlook change.
"Instead, it is a sign that policy is proceeding in line with our expectations," Powell, who took over as head of the Fed earlier this year, said in a press conference after the release of the statement.
The Fed sees the economy growing at a faster-than-expected 3.1 per cent this year and continuing to expand moderately for at least three more years, amid sustained low unemployment and stable inflation near its 2 per cent target.
Wednesday's rate increase once again drew criticism from President Donald Trump, who has complained that the Fed's actions are countering his efforts to boost the economy.
"We're doing great as a country. Unfortunately they just raised interest rates because we are doing so well. I'm not happy about that," Trump told a press conference on the sidelines of the United Nations General Assembly in New York.
"I'd rather pay down debt or do other things, create more jobs. So I'm worried about the fact that they seem to like raising interest rates."
Powell, who was appointed by Trump and took over as Fed chairman earlier this year, said the central bank would remain independent.
"We don't consider political factors or things like that," the Fed chief said.
Wednesday's rate hike was the third this year and the seventh in the last eight quarters.
The Fed's latest projections show the economy continuing at a steady pace through 2019, with gross domestic product growth seen at 2.5 per cent next year before slowing to 2.0 per cent in 2020 and to 1.8 per cent in 2021, as the impact of recent tax cuts and government spending fade.
Inflation was forecast to hover near 2 per cent over the next three years, while the unemployment rate is expected to fall to 3.5 per cent next year and remain there through 2020 before rising slightly in 2021.
The jobless rate is currently 3.9 per cent.
Risks to the current run of economic growth, such as the threat of a damaging round of global tariff increases, were largely set aside.
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