The Fed now foresees four rate hikes this year, up from the three it had previously forecast.
Fed officials expect to raise interest rates at least once more in 2018 and had been split on a possible fourth hike in their last meeting.
Interest rate hikes will hit consumers in their wallets.
He added that continued steady rate increases would nurture the expansion, as the Fed approaches a sort of sweet spot with its employment and inflation goals largely met, the economy withstanding higher borrowing costs and no sign of a spike in inflation.
The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the US central bank's shift from policies used to battle the 2007-2009 financial crisis and recession.
"The labor market is getting tighter, and price pressures are picking up", said Greg McBride, chief financial analyst at Bankrate.com.
This hike, which was widely expected, is the Fed's second of 2018, and the central bank signaled it is likely to do two more increases by the end of this year. "The Fed is prepared to be quicker about pushing rates higher".
The Fed cited the strength of the economy in its statement announcing the rate hike.
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The latest rate increase was in line with investors' expectations ahead of the release of the policy statement.
At a news conference, Powell sought to portray the Fed's actions as evidence mainly that the economy is doing well and not that the central bank is eager to accelerate its rate increases.
Trump has slapped tariffs on steel and aluminum imports, has threatened additional tariffs on Chinese imports and has directed his administration to consider further duties on imported cars. That's good news because it means the economy is largely moving on its own steam in the eyes of the Fed.
Growth is also expected to stay close to nearly 3 percent of GDP through the year, and Fed officials are eager to prevent the economy from overheating.
The Fed raised its target range one-quarter of a percentage point, to 1.75 to 2 percent. Unemployment, now at an 18-year low of 3.8 per cent, would drop to 3.6 per cent by year's end and to 3.5 per cent in 2019 and 2020 - levels not seen in 49 years.
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.
"Job gains have been strong, on average, in recent months, and the unemployment rate has declined", the Fed said. While the national economy appears to be on solid ground for 2018, the Fed must now consider how growing global trade disputes could slow USA growth. Canada, the European Union and Mexico have all pledged to retaliate with tariffs on USA imports, which some studies show could cost the US close to 200,000 jobs.