WASHINGTON (AFP) - Federal Reserve policymakers lifted the federal funds rate a quarter point to 1.75 percent, saying the US economy has "regained some traction" and no longer needs as much stimulus.
The Federal Open Market Committee also said in a statement that it sees the risks to the US economy as balanced, allowing a more neutral monetary policy.
The rate hike vote was unanimous and marked the third increase in as many meetings of the FOMC since June. The action had been widely expected by financial markets.
Fed chairman Alan Greenspan and his colleagues said that even with these three rate hikes, monetary policy remains accommodative and that this should be removed "at a pace that is likely to be measured."
The language, similar to the Fed's last statement in August, suggests that it sees stabilizing US economic conditions that can support higher interest rates.
"After moderating earlier this year partly in response to the substantial rise in energy prices, output growth appears to have regained some traction, and labor market conditions have improved modestly," the statement said.
The statement added that inflation remains tame despite the recent surge in oil prices.
"Despite the rise in energy prices, inflation and inflation expectations have eased in recent months," the statement said.