The US Federal Reserve raised its benchmark interest rate on Wednesday for the first time in a year and signalled that rates could continue to rise next year more quickly than officials had expected, a report said.

The increase raised the Fed’s key interest rate by a quarter point, from a range of 0.25 to 0.5 per cent to a range of 0.5 to 0.75 per cent, reflecting Fed officials' confidence in the strengthening of the US economy, reported The Washington Post.

The Federal Open Market Committee was recognizing the considerable progress the economy has made toward full employment and an inflation target of 2 per cent, said Fed chair Janet Yellen.

She indicated that she did not see much need for a large, deficit-financed boost from federal fiscal policy, either tax cuts or spending increases.

“I would say at this point that fiscal policy is not obviously needed to provide stimulus to help us get back to full employment,” Yellen said.

Meanwhile gold prices fell on Thursday to a new low in more than 10 months as the dollar surged after the US central bank raised interest rates for the first time in a year and signalled further rate hikes for 2017.

Spot gold edged 0.4 per cent lower to $1,139.54 an ounce by 0108 GMT. The bullion touched a new low of 1,134.71 an ounce, its lowest since February 3. The yellow metal fell over one per cent in the prior session, according to Reuters.

US gold futures fell nearly two per cent to $1,141.80 per ounce. The prices fell to $1,136.4 an ounce earlier in the session to their lowest since February 1 and registered their biggest percentage fall in one month.