Citing brightening job market, officials at the Federal Reserve said on Wednesday that more increases lie ahead.
The unanimous decision by the US central bank's policy-setting Federal Open Market Committee moves the benchmark federal funds rate - which affects credit costs throughout the economy - to 2% from 1.75%.
The Fed began to lift rates in June from a rock-bottom 1% and looks likely to keep on with a campaign of "measured" increases to remove stimulus as the economy shows signs of resuming a healthy pace of growth.
The latest increase follows Friday's Labour Department report that showed the creation of a surprisingly large 337,000 jobs last month.
A further sign of labour market strength came on Wednesday in the form of an unexpectedly small rise in new claims for unemployment benefits last week, implying fewer layoffs.
The long-awaited improvement in the labour market should keep incomes growing and bolster vital consumer spending.