The Federal Open Markets Committee released its minutes from its January meeting on Wednesday, showing members of the Federal Reserve are becoming increasingly more confident in their economic outlook.
The Fed grew more positive on its economic outlook due to substantial underlying economic momentum, and were even more optimistic about hitting their inflation target, according to an article by Craig Torres for Bloomberg.
The officials announced that they anticipated the rate of economic growth would exceed their expectations in 2018 of its sustainable longer-run pace, according to the article. Fed members also expressed they expect the labor market conditions to continue strengthening.
From the article:
“A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate,” the minutes said.
U.S. central bankers estimated economic growth at 2.5 percent for 2018 in December. Private analysts have boosted their outlook to 2.6 percent, according to the median forecast in a Bloomberg News survey. Stocks peaked on Jan. 26 before tumbling at the start of February, and longer-term government bond yields began to climb on the prospects of larger amounts of Treasury issuance.
During the January meeting, the FOMC elected not to raise the federal funds rate in January, in what was the last meeting chaired by Janet Yellen.
Now, the market is forecasting the Fed will raise interest rates during its March meeting, the first for successor Jerome Powell.