Fed officials expect inflation to rise steadily over the next 12 months, but not to surge as many investors have feared. The FOMC forecasts that inflation will settle around its 2 percent target by year-end and into 2019.
Stocks fell into "correction" territory earlier this year over Wall Street's concerns that the central bank might have to raise interest rates faster than expected to keep a lid on inflation.
That remains a possibility. Compared with the Fed's last readout on the economy in December, more policymakers now think they may have to increase the pace of rate hikes this year, with several officials forecasting four increases.
"More fed funds rate increases are coming in 2018, but the FOMC is split right now between two and three additional rate hikes," said Gus Faucher, chief economist with PNC Financial Services Group, in a note. "It depends on what happens to the economy through the rest of the year."
The Fed's rate hike marks its sixth since it began tightening credit in December 2015. It is sticking with the forecast it issued in December for three increases in 2018. But it did boost its 2019 estimate from two hikes to three.
