The Fed is not expected to change interest rates, but it is likely to announce that it will start letting the bonds held on its balance sheet roll off, probalby beginning in October. For comparison, the economy grew at only a 1.2 percent rate in the first quarter of the year.
In her quarterly press conference, Yellen said, "we think the economy is performing well, and we have confidence in the outlook for the real economy". Stocks in Southeast Asia were mixed.
CURRENCIES: The dollar rallied against its peers after the Fed statement, rising to a almost two-month high of 112.53 yen from 112.23 yen on Wednesday.
Anticipation of Wednesday's Fed announcement sent financial stocks higher on Monday, helping the S&P 500 end higher despite losses in five of the eleven major S&P sectors. The Fed is likely to undershoot its target of 2 percent annual inflation for the sixth consecutive year.
Domestically, investors will also be watching for tomorrow's gross domestic product data.
The Nasdaq is up 1,072.93 points, or 19.9 percent. The median prediction is now that the benchmark rate will stabilize at 2.8 percent, down from a median estimate of 3 percent in June. Investors in China, Japan and South Korea don't believe there will be a war because they perceive a low potential reward with high risk. Inflation has been stubbornly low for years, suggesting the Fed should hold off.
Other signals point to a healthier economy.
The unemployment rate is forecast to remain at 4.3 percent this year before falling to 4.1 percent next year and remaining there in 2019. The Fed expects joblessness to fall even further, to just over 4 percent, in the next few years. However, the Fed took into consideration the impact of three recent hurricanes, including Hurricane Maria, which has struck Puerto Rico on Wednesday.
In a statement released by the Federal Reserve, they pointed towards the strength of job growth and to the increasing in household and business spending.
Central bankers have been in a bind over when to lift rates again.
Looking at the summary of economic projections (SEPs) and 'dot plot, ' commentary from the initial FOMC statement suggests that policymakers are still cautiously optimistic on the United States economy.
"People were surprised that Yellen stuck with the script that weak inflation is transitory so there was some short-covering", said Paresh Upadhyaya, director of currency strategy at Amundi Pioneer Asset Management in Boston.
Yellen has politely dodged questions about whether she would stay for a second term, if renominated.
The only other potential choice for Fed chair Trump has mentioned is Gary Cohn, a former Goldman Sachs executive who leads the president's National Economic Council.