NEW YORK (CNN/Money) - The Federal Reserve raised a key interest rate a quarter percentage point Wednesday, the fourth such hike this year, in a move that was widely expected.
The central bank said it raised its target for the fed funds rate, an overnight bank lending rate, to 2 percent from 1.75 percent. It had previously raised the rate in June, August and September. The central bank also raised its largely symbolic discount rate, for Fed loans directly to banks, a quarter point to 3 percent.
Perhaps more importantly, policy-makers at the Federal Open Market Committee (FOMC) left the language in their statement largely unchanged, signaling they remain optimistic about the economy -- and are likely to keep raising rates at a "measured" pace.
"Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved," the Fed statement noted. "With underlying inflation expected to be relatively low, the (Fed's policy-making) Committee believes that policy accommodation can be removed at a pace that is likely to be measured."
Economists and investors read that as a sign that the Fed is unlikely to take a break from raising rates next month as it continues a series of increases it began in June to bring rates up from their lowest levels in more than 40 years.
"What's striking is how much it looks like the statement from the last three meetings," says Chris Low, chief economist at FTN Financial.
Low expects the Fed to raise rates again next month, and to continue hiking them well into next year. "Bottom line is, those expecting the Fed to take a break from tightening now that the funds rate is at 2 percent are likely to be disappointed," he said.
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 The Federal Reserve raised a key interest rate a quarter percentage point to 2 percent.
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Fed officials are thought to be targeting a "neutral" rate -- one that would allow the economy to grow without too much friction or risk of overheating -- though exactly what that rate is remains a question. St. Louis Fed president William Poole has said neutral rates would be in the range of 3 to 5 percent.
Even after Wednesday's increase, the fed funds rate remains about on par with inflation, creating stimulus for the economy.
Still, some economists predict the Fed will forgo raising rates at one of its upcoming meetings, possibly next month.
"As long as energy prices remain high, they're likely to move in baby steps," says Mark Vitner, senior economist at Wachovia. "I just don't think it's a slam dunk that they raise rates in December."
In recent weeks, Fed officials had signaled they might be open to a pause in rate hikes, stressing that coming readings on the economy will be crucial to their deliberations.
Fed vice chairman Roger Ferguson said late last month that it was "very important that the FOMC not go on a forced march" to a neutral rate, referring to the Fed's policy-making Federal Open Market Committee.
Janet Yellen, president of the Federal Reserve Bank of San Francisco, suggested she was similarly cautious in a recent speech. "I wouldn't say we're completely out of the woods just yet," Yellen said. "Indeed there are some issues that have the potential to be troublesome going forward."
Given those signals, some economists had said the Fed could take a break on the march to higher rates, particularly when the economy seemed to be slowing over the summer, and as oil prices crept consistently higher.
But after last Friday's report on October jobs growth came in much stronger than anticipated, worries about slower growth were assuaged.
The government reported Friday that employers added 337,000 jobs last month, the biggest gain since March. It also revised upward the gains from recent months. Meanwhile, crude oil prices have fallen from an all-time high near $56 a barrel to around $49 on Wednesday.
Largely as a result of those numbers, Fed watchers who had wondered about the December meeting now widely expect rate hikes to continue without interruption.
Even before Wednesday's statement from the FOMC, traders were betting on a better than 80 percent chance of a rate hike next month. The next meeting for the Fed is set for Dec. 14.
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