Fed officials maintained their projection that the benchmark rate would rise to 0.625 per cent in 2015, while dropping it to 1.625 per cent next year -- lower than their March median forecast of 1.875 per cent, according to Bloomberg.
"The Fed is talking about the labour market tightening somewhat, which seems to be a hint that it is a step closer to raising rates," Nick Kalivas, senior equity product strategist at Invesco PowerShares in Downers Grove, Illinois. "At the same time, it seems like there was a notching down of the magnitude of rate hike expectations."
Policy makers now expect US gross domestic product to grow between 1.8 per cent and 2.0 per cent in 2015, down from a March projection of between 2.3 per cent and 2.7 per cent. For 2016, the range changed to between 2.4 per cent and 2.7 per cent, from between 2.3 per cent and 2.7 per cent in March.
A look at interest rates and the Federal Reserve's bond purchasing:
"They said the economy is back on track, but there's no hint at all of an immediate tightening," John Canally, chief economic strategist at LPL Financial Corp, told Bloomberg. "It looks like there's a shallower rate hike path for 2016 and 2017. That should be supportive of risk assets."
Futures contracts show that traders still see December as the first Fed meeting when a rate hike is more likely than not, based on CME FedWatch, Reuters reported. Traders see a 66 percent chance of a December hike, and a 49 percent chance of an October hike.
Wall Street moved higher. In late trading in New York, the Dow Jones Industrial Average rose 0.42 percent, the Standard & Poor's 500 Index added 0.11 percent, while he Nasdaq Composite Index climbed 0.14 per cent.
Gains in shares of American Express and those of Intel, last trading 1.3 percent and 0.9 percent higher respectively, led the Dow higher.
In Europe, the Stoxx 600 Index ended the day with a 0.5 percent drop from the previous close. The UK's FTSE 100 Index fell 0.4 per cent, Germany's DAX declined 0.6 per cent, while France's CAC 40 Index slid 1 per cent.
Greek Prime Minister Alexis Tsipras said his government was prepared to assume responsibility for rejecting the latest proposal for debt relief for the nation from its international creditors, as he ratchets pressure on those creditors and his euro zone peers to cut Greece some fiscal slack.