The US Federal Reserve has kept interest rates unchanged in its first meeting since President Donald Trump took office, but painted a relatively upbeat picture of the US economy that suggested it was on track to tighten monetary policy this year.

The central bank said job gains remained solid, inflation had increased and economic confidence was rising, although it gave no firm signal on the timing of its next rate move.

"Measures of consumer and business sentiment have improved of late," the Fed said in a unanimous statement following a two-day policy meeting in which it left its benchmark interest rate in a range of 0.50% to 0.75%.

Fed policymakers also highlighted that unemployment was still hovering near its recent low.

The unemployment rate is currently 4.7%, at or near the level many policymakers consider to be full employment.

The central bank raised rates in December for only the second time in a decade and forecast three rate increases in 2017.

The Fed is still awaiting clarity on the possible impact of Mr Trump's economic policies.

Earlier this month, Fed Chair Janet Yellen underscored that with the economy near full employment, the Fed risked a "nasty surprise" on inflation if it is too slow with rate hikes.

The Fed said in its statement it still expects inflation to rise to its 2% target in the medium term, although it noted that market-based measures of inflation compensation are still low and survey-based measures of long-term inflation expectations are little changed.

On Monday, the Commerce Department reported an uptick in inflation to 1.7%.

Investors had all but ruled out a rate increase this week, given the uncertainty surrounding Trump's fiscal and trade policies and how they would affect the Fed's outlook.

Mr Trump's promises on infrastructure spending, tax cuts, regulation rollbacks and a renegotiation of trade deals could quickly spur higher inflation, which may necessitate a faster pace of rate hikes.

The businessman-turned-politician has offered few details on his economic plans or a timeline for their rollout, while the announcement of policies viewed by many as protectionist and an immigration crackdown have caused market jitters.