The U.S. dollar increased against most other major currencies in late trading on Wednesday, as the Federal Reserve decided to raise interest rates for the third time this year.

The Fed raised short-term interest rates by a quarter of a percentage point, its third rate hike this year and the eighth such move since late 2015.

"In view of realized and expected labor market conditions and inflation, the (Federal Open Market) Committee decided to raise the target range for the federal funds rate to 2 to 2-1/4 percent," the central bank said in a statement after concluding a two-day meeting.

The Fed said the U.S. labor market has "continued to strengthen" and economic activity has been "rising at a strong rate", with household spending and business fixed investment growing "strongly".

The central bank expected the U.S. economy to grow at 3.1 percent this year, higher than 2.8 percent estimated in June, according to the Fed's latest economic projections released on Wednesday.

Solid economic growth and falling unemployment rate are likely to keep the Fed on a steady path toward tightening monetary policy to prevent the U.S. economy from overheating, analysts said.

"The Fed no longer claims policy is accommodative. The change reflects the possibility the funds rate is approaching neutral, but of course the FOMC (Federal Open Market Committee) is not expected to stop at neutral," said Chris Low, chief economist at FTN Financial, in a note.

The dollar index, which measures the greenback against six major peers, rose 0.05 percent at 94.1791 in late trading.

In late New York trading, the euro fell to 1.1762 dollars from 1.1767 dollars in the previous session, and the British pound decreased to 1.3184 dollars from 1.3186 U.S. dollars in the previous session. The Australian dollar was up to 0.7276 dollar from 0.7249 dollar.

The U.S. dollar bought 112.83 Japanese yen, lower than 112.93 Japanese yen of the previous session. The U.S. dollar increased to 0.9650 Swiss franc from 0.9649 Swiss franc, and it rose to 1.3002 Canadian dollars from 1.2950 Canadian dollars.