"The committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee's symmetric 2 percent objective over the medium term", according to its statement following a meeting in Washington.
The central bank also lifted its growth forecast to 2.8 percent this year, up a small amount from its projection of 2.7 annual growth in March. He'll likely address the decision to hike rates and the Fed's views on the overall economic outlook. The step was needed, the Fed said, to be sure rates stay within the intended boundaries. After years in which the economy expanded at roughly a tepid 2 percent annually, growth could top 3 percent this year.
With employers hiring at a solid pace month after month, unemployment has reached 3.8 percent.
The unemployment rate is 3.8%, the lowest since 2000 and tied for the lowest reading since 1969.
Beginning in 2008 in the midst of the financial crisis, the Fed kept its key rate unchanged at a record low near zero for seven years.
The Fed's twin mandate is to bolster employment while controlling inflation, and in the current environment more rate rises appear inevitable.
While many economists worry about a trade war harming growth, the Fed did not mention trade concerns in its statement. While Japan's central bank isn't expected to make any major policy shifts, anticipation is rising that the ECB may outline as early as this week plans to begin paring its bond-buying stimulus program as a prelude to ending them altogether.