The Fed, as expected, also said it would begin in October to reduce its approximately $4.2 trillion in holdings of US Treasury bonds and mortgage-backed securities by initially cutting up to $10 billion each month from the amount of maturing securities it reinvests.
According to the well-telegraphed plan, the Fed will start by trimming no more than $10 billion per month from its balance sheet, with that cap rising each quarter for a year, until it hits $50 billion per month.
Still, a majority of Fed policy makers projected that they see the US central bank's benchmark rate rising by a quarter percentage point by year end from its current range of 1 percent to 1.25 percent.
The median official projection of the long-run rate was 2.75 percent, down from 3 percent in June, as low inflation makes further rate hikes less likely. There are several vacancies on the Fed board, and there could be a change in leadership early next year if President Donald Trump decides not to renominate Chair Janet Yellen.
That will all be on display Wednesday when the Fed's policy committee announces its next moves and Yellen holds a press conference.
The economy will continue to grow at a pace that is "moderate" even if the hurricanes Harvey, Irma and Maria "which have devastated many communities" will affect " economic activity in the short term", the judge of the Fed.
South African bonds were mixed on Tuesday afternoon, with investors awaiting the Reserve Bank's interest-rate decision on Thursday, and the release of consumer inflation data on Wednesday.
The FOMC also indicated that a possible third rate hike before the end of the year is still on the table. But inflation is still running below the Fed's 2 percent target.
Fed policymakers actually revised up their forecast for economic growth this year to 2.4 per cent from a 2.2 per cent projection in June.
Also weighing down Australian stocks, but helping those in Japan and Europe was a jump in the US dollar, which pulled metals prices lower. "So there's a little adjustment going on there", said David Joy, chief market strategist at Ameriprise Financial in Boston. Prior to the Fed's announcement, market expectations suggested the next rate hike in March 2018, followed by one in the second half of 2018.
The FOMC also said it would keep its target overnight interest rate unchanged in the 1 percent to 1.25 percent range.
The dollar index against a basket of six major currencies was up 0.1 per cent at 92.623 and near a two-week high of 92.697 set overnight, when it added 0.8 per cent.