The Fed maintained its plan for normalising its $4.2 trillion portfolios of Treasury debt and mortgage-backed securities and said it would start by trimming reinvestment in treasury securities by $6 billion per month.
The data comes as the Bank of England ends its own policy meeting Thursday and will put pressure on the policy board to raise rates within its two percent target. S&P 500 has gained 0.45 percent, .DJI rose 0.44 percent, and the Nasdaq by 0.73 percent.
Rising interest rates eventually affect millions of Americans from home buyers to credit card holders to savers.
With the Federal Reserve interest rate decision only hours away, the US Dollar firmed broadly.
"With the rate hike now 96 percent priced in focus will fall on the Fed's forward guidance and importantly their views surrounding low inflation", Stephen Innes, senior trader at OANDA, said in a note.
Meanwhile, the median projection for the Fed funds rate in 2018 was unchanged at 2.1%.
In its statement following a two-day meeting, the Fed's policy-setting committee indicated the economy had been expanding moderately, the labour market continued to strengthen and a recent softening in inflation was seen as transitory.
All eyes were on the USA central bank, which is scheduled to release its rate decision at 1800 GMT on Wednesday with a news conference to follow from Chair Janet Yellen.
Inflation is up from a year ago, but it is not quite where the Federal Reserve wants it to be to justify a normalization from the current low-rate environment. "That points to a flatter yield curve". Solid job gains have pulled down the unemployment rate to lower-than-expected levels, at 4.3% in May, but inflation has unexpectedly slowed. The remainder will be reinvested. Those figures would rise in increments over a year until they reached $30 billion a month in Treasurys and $20 billion in mortgage bonds.
Once both targets are met, the total runoff per month will be $50 billion.
In a nutshell, the Fed will eventually unwind its balance sheet at a rate of $50 billion per month, and several Fed officials have indicated that the program will continue until the balance sheet drops to a $2 trillion-$2.5 trillion level (it's now $4.5 trillion).
Overall, the US has grown at a slow and steady pace since 2009, making it one of the longest periods of growth in American history. Personal inflation data and retail sales for May will be released in advance of the Fed's news. "The committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run". However, the 2-year Treasury yield, which has also moved higher prior to the last three rate hikes, has stalled.
The summary of economic projections points to a 1.6 percent headline rate for personal consumption expenditures, the central bank's preferred inflation indicator.
"Near-term risks to economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely", the committee said.
Although it did not provide a precise date for the start of its balance sheet reduction, the FOMC said it would begin to gradually roll-off a fixed amount of assets each month.