By Ovunc Kutlu
NEW YORK (AA) - The Federal Reserve increased its benchmark interest rate by 0.25 percent, marking its first rate hike since last December and only the second in a decade, the Federal Open Market Committee (FOMC) announced Wednesday.
After keeping rates unchanged in the past seven meetings, all 10 of the FOMC members voted in favor of raising the range for the federal funds rate to 0.50 - 0.75 percent, from 0.25 - 0.50 percent.
The FOMC also noted that it now expects to increase rates three times in 2017, from the previous projection of two rate hikes.
The unanimous decision came "in view of realized and expected labor market conditions and inflation", an FOMC statement read.
"Job gains have been solid in recent months and the unemployment rate has declined," it added.
The American economy added 178,000 jobs in November and unemployment rate fell to 4.6 percent.
The FOMC said it will "assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation", in order to determine the timing of next rate hikes.
The Fed also added that it expects American economy to grow by 1.9 percent in 2016 and 2.1 percent in 2017, which are both 0.1 percent higher than the central bank's projections in its September meeting.
The estimates of unemployment rates were also lowered by 0.1 percentage points. The bank projects unemployment rate to average 4.7 percent and 4.5 percent in this year and the next, respectively.
Inflation is anticipated to be 1.5 percent in 2016 and 1.9 percent in 2017.