The broadly welcomed announcement compounded the upbeat mood on trading floors in Asia fuelled by this week's pledges of fresh stimulus to boost Chinese growth.

After Wednesday's keenly awaited meeting, bank boss Jerome Powell left the door open for another increase in September but added that any decision would be data-dependent.

"Policy has not been restrictive enough for long enough to have its full desired effects," he told reporters after the decision. 

"So we intend, again, to keep policy restrictive until we're confident that inflation is coming down sustainably toward our two percent target -- and we're prepared to further tighten if that is appropriate."

But he added that officials would "be going meeting by meeting".

In its official statement, the Fed said it will "continue to assess additional information and its implications for monetary policy", looking at a range of data points.

Analysts said that with a healthy run of indicators in recent months, there is a hope that more than a year of tightening may have finally come to an end.

Powell also said he was optimistic that the world's top economy could dodge a recession, a situation many had bet on earlier in the year.

"The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession," he added.

Analysts said the meeting did all it needed to do by maintaining a hawkish tilt even as most observers think the hiking campaign is essentially over.

The latest hike comes after the bank stood pat on rates last month, but Kerry Craig at JP Morgan Asset Management pointed out that several members of the policy board at that meeting said that foresaw two more hikes in 2023.

"Given this, there would have been little benefit for the Fed conveying anything other than a hawkish lean and commitment to getting inflation back to target in their commentary," he added.

"By reiterating data dependency ahead of future measures, the Fed wants to increase its optionality as it has the chance to digest two more inflation and jobs reports before the next meeting." 

Wall Street provided a tepid lead, though the Dow rose for a 13^th-straight day, its best run since 1987, according to Bloomberg News.

But Asia enjoyed much stronger buying, with Hong Kong up more than one percent, while Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei, Wellington and Jakarta were also well up.

Bets that the Fed will not hike any further also weighed on the dollar against the yen and sterling.

The euro moved in a small range ahead of a policy decision from the European Central Bank later Thursday, with debate swirling around when it will call an end to its own tightening drive.

That is followed by the Bank of Japan's meeting Friday, which will be closely watched for signs it will move away from years of ultra-loose monetary policy that has hammered the yen.

Investors are also keeping an eye on Beijing after it announced plans to provide support to key parts of the economy, particularly the struggling property sector, after a string of weak data showing the post-Covid recovery had run out of steam.