U.S. Fed raises interest rates, signals two more rate hikes in 2018

The U.S. Federal Reserve on Wednesday raised the benchmark interest rate by 25 basis points and signaled two more rate hikes in 2018, citing "strengthened" economic outlook in recent months.

"In view of realized and expected labor market conditions and inflation," the Fed decided to raise the target range for the federal funds rate to 1.5 to 1.75 percent, the central bank said in a statement after concluding a two-day meeting.

Fed officials widely expected that the U.S. economy would grow at a faster pace this and next year, driven by fiscal stimulus and improved overseas demands.

The U.S. economy will grow at 2.7 percent in 2018 and 2.4 percent in 2019, higher than previous projections of 2.5 percent and 2.1 percent, respectively, according to the Fed's forecasts.

Fed officials also expected core inflation to rise to 2.1 percent next year, slightly above the Fed's target and up from an earlier projection of 2 percent.

Fed policymakers still envisioned three rate hikes in 2018, unchanged from their forecast in December.