The central also updated its projections for inflation to take account of a slowdown.
We continue to expect a total of two or three rate hikes in 2017.
The committee said that labor-market data had improved and the unemployment rate has declined since the group met in May. Along with the statement, the FOMC will also release a new set of economic forecasts (gross domestic product [GDP], the unemployment rate, inflation, and fed funds projections, also known as the "dot plots").
Market participants' focus will be on signals on the frequency of further hikes and how the Fed plans to unwind its huge Treasury bond stockpile over the years ahead.
This comes as the Bank of England meets to decide on United Kingdom interest rates.
Since the 2008 financial crisis, the Federal Reserve has lowered the interest rate to encourage borrowing and risk-taking. Of the economists surveyed by Bloomberg, 73 out of 78 believe a rate hike is in store. "The combination of a rate hike and shrinking the balance sheet equates to a tightening monetary policy at a time when inflation is lower than expected".
U.S. stocks pared gains to trade little changed on Wednesday as a set of weak economic data weighed on bank stocks, while investors braced for a near-certain interest rate hike by the Federal Reserve. Both figures were the highest ever.
How Large Is The Disconnect Between The Fed And The Market?It forecast that prices will rise just 1.6 percent this year, down from a March forecast of 1.9 percent. But the Fed indicated it likely would increase short-term rates one more time this year, and three times in 2018. The US stock markets remained steady as a rate hike this time around had already been baked in the prices.
The Dow rose 0.4 percent and the S&P 500 gained half a percent to touch fresh record closing highs while the tech-heavy Nasdaq advanced 0.7 percent. Trump said his program would double growth to 4 percent or better, though the administration based its first budget plan on achieving a lower but still highly ambitious goal of 3 percent annual growth. Mr Kashkari also voted against the March rise.
U.S. markets once again managed to break records again yesterday, this time the Dow Jones and S&P500 making new record closes, helped by a rebound in financials and the tech sector ahead of today's latest Federal Reserve rate decision, though the Nasdaq100 remains well below the peaks seen last week.
The federal funds rate is what depository institutions, including banks and credit unions, maintain at the Federal Reserve to lend to other institutions overnight.
Greg McBride, chief financial analyst for Bankrate.com, said the cumulative effect of recent rate increases on consumers is "mounting".
Exactly when the next rate increase will be is a matter of conjecture. But that reads too much into a few months' worth of data.
What Should We Expect From Yellen's Q&A?
In a nutshell, the Fed will eventually unwind its balance sheet at a rate of $50 billion per month, and several Fed officials have indicated that the program will continue until the balance sheet drops to a $2 trillion-$2.5 trillion level (it's now $4.5 trillion).