Equity markets in the U.S. and Asia rose after the Federal Reserve raised its target federal funds rate on Wednesday to a range of 0.25 to 0.5 percent, the first increase since June 29, 2006.
In a statement, the FOMC said it will be some time before the central bank starts unwinding its $4.5 trillion balance sheet and insisted that the pace of increases will be gradual and dependent on the quality of economic data. The long-anticipated move indicates that the economy has finally developed enough upward momentum to withstand higher interest rates, traders said.
Wall Street had widely expected the Fed to raise the rate from its the long-held near-zero range, a move that will have wide implications for global markets and interest rates.
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Correction: A quote about the pending rate announcement by David Kelly was misattributed in an earlier version.