Federal Reserve officials, meeting for the last time with Janet Yellen as their chief, left borrowing costs unchanged while adding emphasis to their plan for more rate hikes, setting the stage for an increase in March under her successor Jerome Powell.

"The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate," the policy-setting Federal Open Market Committee said in a statement in Washington. It added the word "further" twice to the previous language.

The changes to the statement, collectively acknowledging stronger growth and more confidence that inflation will rise to the 2% target, may spur speculation that the Fed will pick up the pace of interest-rate increases. Officials also said inflation "is expected to move up this year and to stabilize" around the goal, in phrasing that marked an upgrade from December.

At the same time, the Fed repeated language saying that "near-term risks to the economic outlook appear roughly balanced."

With her term ending later this week after President Trump chose to replace her, Yellen is handing the reins to Powell, who has backed her gradual approach and is widely expected to raise interest rates at the open market committee's next meeting for the sixth time since late 2015. Fed officials are hoping to keep a tight labor market from overheating without raising borrowing costs so fast that it would stifle the economy.

"Gains in employment, household spending and business fixed investment have been solid, and the unemployment rate has stayed low," the Fed said, removing previous references to disruptions from hurricanes. "Market-based measures of inflation compensation have increased in recent months but remain low."

The open market committee said in a separate statement Wednesday that it elected Powell as its chairman, effective Feb. 3. He will be sworn in as chairman of the Board of Governors.

During Yellen's four years at the helm, the U.S. unemployment rate has fallen to 4.1%, the lowest since 2000, as she navigated the Fed away from its crisis-era emergency policies and inched interest rates away from zero. Yellen exploited low inflation to maintain low-interest rates that helped pull millions of more Americans back into jobs, and under her leadership the Fed began to pay more attention to labor-market inequality.

Powell takes over an economy that expanded at an annualized 2.6% pace in the final three months of the year, helped by stronger business investment and consumer spending. A tax overhaul signed into law by Trump in December is also likely to lift growth in 2018, though the Fed and most analysts see little long-term boost, if any, to the economy.

The Fed statement didn't contain any reference to the tax legislation.

Source: latimes.com by Craig Torres and Christopher Condon