The economy grew 2.3 percent in 2017, extending a prolonged period of unusually stable growth. And economic forecasters expect somewhat faster growth this year, partly as a result of the $1.5 trillion in tax cuts that went into effect at the beginning of the year.
The unemployment rate stood at 4.1 percent in December, and Fed officials don’t expect it to fall much further. Instead, as growth continues, they expect inflation to begin increasing more quickly.
The Fed raised its benchmark rate three times last year, and officials plan to keep raising rates this year, although there isn’t a consensus as to how many increases the markets should expect.
But Fed officials are still committed to moving slowly. Growth, while steady, remains weak by historical standards, and while unemployment is quite low, wage growth remains sluggish, too.
The Fed last raised rates at its final meeting of 2017, in December. Investors expect that the Fed will pause at this meeting, then resume increases in March.