Slow and Steady

The Fed, under Ms. Yellen, pursued gradual rate increases and a highly choreographed sell-off of the portfolio of bonds it bought to help prop up the economy after the 2008 financial crisis. Mr. Powell was among the governors who voted for that approach, and the announcement on Wednesday signaled he will maintain it, particularly if economic growth continues to accelerate and unemployment remains at or below the 4.1 percent level it reached in February.

The announcement underscores the Fed’s gathering confidence in the economy as well as its focus on the potential for inflation, which has remained persistently muted throughout the expansion. Officials raised their median estimates for economic growth this year to 2.7 percent, up from 2.5 percent in December. They raised their estimate for growth in 2019 to 2.4 percent, up from 2.1 percent. They now expect the unemployment rate to fall to 3.8 percent this year and 3.6 percent in 2019, a low level by historical standards. In December, officials said they expected unemployment to be 3.9 percent both this year and next.

Officials’ growing optimism tracks with the expectations of many Wall Street analysts. “We think Fed officials will view the growth and inflation data in recent months as encouraging,” analysts at Goldman Sachs wrote in a research note ahead of the meeting, “particularly with tax cuts now implemented and with an additional fiscal boost from federal spending arriving this year.”

Three Increases

Fed officials indicated they are likely to raise rates a total of three times in 2018, in keeping with their projections in December. But officials were divided, with slightly less than half indicating they expect to raise rates at least four times this year. By a slim margin, officials said they expect an additional rate increase to come in 2019, for a total of three increases that year.

In his news conference, Mr. Powell left the door open to more or fewer than three increases this year, depending on economic conditions. “Like any set of forecasts, those forecasts will change over time,” he said. “It could change up. It could change down”