The U.S. Federal Reserve on Wednesday raised short-term interest rates by a quarter of a percentage point, its third rate hike this year and the eighth such move since late 2015.

"In view of realized and expected labor market conditions and inflation, the (Federal Open Market) Committee decided to raise the target range for the federal funds rate to 2 to 2-1/4 percent," the central bank said in a statement after concluding a two-day meeting.

The Fed said the U.S. labor market has "continued to strengthen" and economic activity has been "rising at a strong rate", with household spending and business fixed investment growing "strongly".

The Fed also said both overall inflation and so-called core inflation for items other than food and energy "remain near" the central bank's target of 2 percent.

The central bank expected the U.S. economy to grow at 3.1 percent this year, higher than 2.8 percent estimated in June, according to the Fed's latest economic projections released on Wednesday.

Solid economic growth and the falling unemployment rate are likely to keep the Fed on a steady path toward tightening monetary policy to prevent the U.S. economy from overheating, analysts said.

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