The Federal Reserve raised U.S. interest rates Wednesday for the second time this year, and officials increased their projections for future hikes on signs of "solid" economic growth and quickening inflation.  

The U.S. central bank's monetary-policy committee raised the benchmark rate by a quarter of a percentage point to a range of 1.75% to 2%, according to a statement released after a two-day meeting. The Fed had held the rate close to zero from 2008 through 2015 in a bid to revive the economy and markets following the financial crisis.

The statement and accompanying materials showed that Fed officials are growing increasingly confident in the health of the U.S. economy, with revised projections showing that the central bank's monetary-policy committee could raise rates a total of four times this year, versus three predicted in March. The committee also upgraded its assessment of economic growth to "solid" from "moderate," while omitting a phrase included in recent statements that interest rates would remain low "for some time."

"Really, the decision you see today is another sign that the U.S. economy is in great shape," Fed Chair Jerome Powell said at a press conference after the statement was released. "For many years we had interest rates held low to support economic activity, and it's been clear that as we get closer to our statutory goals, we should normalize policy."

The latest increase was widely expected by economists, but investors had been divided on how rapidly the Fed would raise rates over the rest of this year as it pushes to normalize monetary policy following the unprecedented actions taken in the aftermath of the crisis.

The Standard & Poor's 500 Index of large U.S. stocks fell 0.4% after the report, while yields on the 10-year Treasury bond were up 0.04 percentage point to 2.98%.

The dollar slipped 0.4% against the euro on Wednesday, but Daragh Maher, head of foreign-exchange strategy at the U.K. bank HSBC Plc, told clients in a report that the faster rate increases by the monetary-policy committee -- officially known as the Federal Open Market Committee, or FOMC -- should ultimately lead to renewed strength in the U.S. currency. Higher U.S. interest rates tend to attract more foreign investors, thus increasing demand for dollars and pushing up the currency's value.

"The hawkish picture painted by this FOMC is likely to reinvigorate the currency," the strategist wrote. 

An updated "Summary of Economic Projections" released along with the statement showed that Fed officials, on average, now see the benchmark rate ending this year at 2.4%, implying two more quarter-point hikes this year. In March, officials had projected the rate would end the year at 2.1%, which would have implied just one more increase. Two additional hikes would take the rate to between 2.25% and 2.5%.

The new projections, along with wording adjustments in the statement, marked "the biggest change in Fed messaging for quite a long time," according to Brian Coulton, chief economist at Fitch Ratings. "The Fed sounds more bullish on the economy."

The shift in the central bank's tone follows a string of recent employment reports showing robust U.S. job growth. 

The U.S. unemployment rate fell in May to 3.8%, the lowest since late 2000, and Fed officials now project it will fall further to 3.6%. Low unemployment often leads to faster wage increases, a key driver of inflation, and the Fed's preferred measure of price increases has climbed to 2% in recent months, reaching the central bank's target faster than officials had projected.

"The labor market, which continues to get tighter and tighter virtually every month and their anticipation of probable wage and inflation increases increases is probably tipping the scale toward that extra tightening of rates," said Tony Bedikian, head of global markets for Citizens Bank, a part of Citizens Financial Group Inc.

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