The US Federal Reserve has signalled that it will step up the pace of interest rate rises next year as a robust jobs market and stronger growth prompted the central bank to raise rates for only the second time in a decade.

Janet Yellen, the Fed’s chairman, described the increase as a “vote of confidence in the economy”, as officials unanimously opted to raise its Federal funds target range to between 0.5pc and 0.75pc, from 0.25pc to 0.5pc.

Ms Yellen said expectations of fiscal stimulus following Donald Trump’s US presidential victory had been one of “several” factors influencing changes to the Fed’s projections, as ­policy­makers in­dic­ated three more hikes next year.

“Job gains have been solid in recent months and the unemployment rate has declined”, Fed officials said in a statement. Economic activity was expanding at a “moderate pace” while some measures of inflation expectations had increased “considerably”.

The dollar jumped against the euro and pound and US Treasury yields climbed after policymakers upgraded their growth and interest rate forecasts and projected a further fall in the unemployment rate. The Dow Jones Industrial Average came within 40 points of a record high of 20,000 shortly after the interest rate decision , though the index closed down 0.6pc at 19,792.53.