The move by the Fed lifts the target range to 1.25 percent to 1.5 percent. The Fed was widely expected to raise rates at this meeting.
The central bank also raised its 2018 GDP estimate to 2.5 percent from 2.1 percent in September.
"There were no major surprises [in the announcement] and inflation remains below the Fed's target," said Jeff Carbone, managing partner of Cornerstone Financial Partners. "The one thing to look out for is whether the economy starts to heat up. That could force the Fed to raise rates quicker."
The consumer price index — a key metric used to gauge inflation — rose 0.4 percent last month, as expected. Excluding food and energy, consumer prices rose 0.1 percent.
Members of the Fed's policymaking committee also kept their interest-rate forecasts unchanged for 2018 and 2019. Treasury yields ticked lower following the Fed's announcement. The benchmark 10-year yield traded at 2.348 percent, while the two-year yield slipped to 1.782 percent.
"The market was looking for a changed in the dot plot but there wasn't one," said Ninh Chung, head of investment strategy and portfolio management at Silicon Valley Bank. "The lack of a fourth rate hike for 2018 could be spurring some buying here."
Wall Street also looked to Congress on Wednesday. House and Senate leaders struck a tentative deal to pass sweeping changes to the U.S. tax code. The Associated Press first reported the news, and CNBC later confirmed the report. The plan would likely lower the corporate tax rate.
"This supports current levels, but I don't think we'll get another significant boost from tax reform," said Jennifer Ellison, principal at Bingham, Osborn & Scarborough. "Some of this was already anticipated a few weeks ago."
The prospect of lower corporate taxes has been a boon for U.S. stocks this year.