US growth is also getting a boost from $1.5 trillion in tax cuts and a $300 billion increase in federal spending, with inflation at the central bank's 2 percent target for two months.
The Fed was widely expected to raise interest rates Wednesday amid strong economic data.
Inflation is also snapping into line, with fresh projections from policymakers on Wednesday indicating it would run above the central bank's 2 percent target, hitting 2.1 percent this year and remaining there through 2020.
They see another three rate increases next year, a pace unchanged from their previous forecast. Fed chief Jerome Powell is expected to announce a quarter point hike in rates.
The S&P 500 Index of USA stocks fell after the Fed decision, while benchmark 10-year yields were up to 2.98 percent from Tuesday's 2.96 percent.
Stay tuned to FOX Business for coverage of Powell's remarks starting at 2:30 p.m. ET.
"The Fed's path of gradual rate hikes and slow (balance) sheet reduction seems well established at this point".
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The Fed's short-term policy rate, a benchmark for a host of other borrowing costs, is now roughly equal to the rate of inflation, a breakthrough of sorts in the central bank's battle in recent years to return monetary policy to a normal footing.
Once the Fed Funds rate reaches this neutral level, or rises above it, conventional thinking dictates that it is only a matter of time before economic growth and inflation slow to the extent where it becomes necessary for the Federal Reserve to start cutting interest rates.
Fed policy makers now see US unemployment at 3.6 percent in the fourth quarter, followed by 3.5 percent in 2019 and 2020, based on median projections.
The Fed offered an improved forecast for unemployment this year, lowering its forecast to 3.6%. The unemployment rate in May was 3.8%, the lowest since 2000 and 1969, while inflation was just below the Fed's 2% target. The median estimate implied three increases in 2019 to put the rate above the level where officials see policy neither stimulating nor restraining the economy. "If the Fed sees a real economic risk of excessive inflation levels the market would have to price in a more aggressive rate hike cycle which would benefit the dollar". Officials have also set in motion a plan to reduce the Fed's bond holdings, as the central bank moves away from accommodative policies employed during and after the 2008 financial crisis.
Reichelt says that in the absence of change in the dot-plot, or a hawkish shift in Fed language, then currency markets will probably stick to their current view that U.S. interest rates may plateau as soon as next 2019, as the Federal Reserve takes the Fed Funds rate up to the so called neutral rate.
The policy statement bypassed discussion about the tensions over the Trump administration's trade policies, including a decision two weeks ago to impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico. He'll likely address the decision to hike rates and the Fed's views on the overall economic outlook.