But, amid brisk American expansion, some Fed policymakers also warned of looming dangers to the world economy, such as the potential for a strengthening United States dollar and possible contagion from sputtering emerging markets, according to minutes from the Fed's most recent meeting three weeks ago. Raising rates is the Fed's way of lowering the risk of runaway inflation, which happens when competition for labor and a shortage of goods in a fast-growing economy leads to big increases in wages and prices.
The Federal Reserve's current monetary policy path would raise the risks of recession in an economy where recent, unexpectedly strong growth may start to taper anyway, St. Louis Fed President James Bullard said on Thursday. Officials have penciled in one more rate increase this year, and three in 2019.
Others said that, to avoid creating asset bubbles or having inflation run above the Fed's two-percent target for too long, the central bank would have to raise rates 'above their assessments of its longer-run level'.
Trump blamed the Fed's string of rate hikes for the market turmoil. Despite his criticism of the Fed's policymaking, Trump's picks have been seen as representing the mainstream of economic thinking about how a central bank should manage interest rates.
Higher rates can impact consumers by increasing borrowing costs, which have already ticked higher.
'A few participants expected that policy would need to become modestly restrictive for a time, ' according to the minutes.
Markets fear currency crises in Turkey, Argentina and other emerging market economies could spread beyond their borders - something that could be sparked as investors pull out to take advantage of higher rates in the US.
"The more the economy's potential growth increases, the more gradual we can be in our removal of monetary policy accommodation", Quarles said.
The United States has imposed tariffs on about $250 billion in Chinese goods, and Beijing has responded by targeting about $110 billion in USA products.
Last week, in a series of comments, Trump called the Fed "out of control", although he said in response to a question that he would not seek to oust Powell as chairman.
USA stock prices recovered some earlier losses but were still down for the day following the minutes.