The FOMC raised its policy rate an incremental 25 basis points and members saw further rate hikes ahead, all part of a gradual process that will move policy from accommodative to neutral. The description of the economy at the March FOMC meeting was moderate with inflation, however, still seen as moving toward target this year to their 2 percent policy goal.
Inflation tied to higher steel costs, evident in yesterday's producer price report and perhaps in today's report on business inflation, was not cited as a specific risk at the March meeting though members did note that retaliatory tariff responses posed downside risks with agriculture highlighted as a special risk.
Rising government deficits and tax cuts were other downside risks cited with members uncertain, given a lack of historical examples, how expansionary fiscal policy at a time of high employment will affect the economy. Quarterly FOMC forecasts were posted at the meeting showing members expected two more 25 basis point hikes this year followed by two to three more the next year. Stocks and bonds are showing no significant reaction to today's minutes.