The Federal Reserve left short-term interest rates alone in May, but don't go away: It's still likely to raise them twice more before the end of the year.

The most probable times, according to Bank of America (BAC) - Get Report economists, are in September and December. Their prediction on the number of hikes, if not the timing, jibes with both central bank projections and interest-rate futures trading that suggest a range of 1.25% to 1.5% by the end of the year, compared with 0.75% to 1% now.

"If financial conditions remain supportive for growth, if there isn't significant market volatility, I think the Fed will be comfortable raising rates in the second half," Bank of America economist Joseph Song said in a telephone interview Wednesday.

While inflation is still lagging behind the Fed's target of 2%, the unemployment rate dropped to just 4.5% as of March -- less than half its 2009 peak during the financial crisis and better than estimates of sustainable long-term levels -- and financial markets are trading near record highs. That gives the central bank room to pull away from interest rates that were cut to nearly zero in 2008 and remained there for seven years, Jan Hatzius of Goldman Sachs (GS) - Get Report wrote in a note to clients.

For now, the economy is likely to continue evolving "in a manner that will warrant gradual increases" after solid job gains and firming capital investments by business, the Fed's monetary policy committee said in a Wednesday statement disclosing its unanimous decision on rates.

The central bank highlighted its assessment that first-quarter economic expansion of just 0.7%, the weakest in three years, was likely transitory. Morgan Stanley (MS) - Get Report is predicting gains of 3.8% in the three months through June, economist Ellen Zentner said in a note to clients, and if incoming data backs that up, the central bank will likely boost rates at its mid-June meeting.

"The sluggish economic growth in the first quarter has become an annual American tradition like the Super Bowl," explained Greg McBride, chief financial analyst at Bankrate.com. "The Fed isn't concerned, pointing to the solid underlying fundamentals, specifically the job market and continued growth in household income."

Further, the committee has, in recent years, "debated the case for hiking 'preemptively' and concluded that it is justified as a prudent response to the threat of labor market overheating," Hatzius wrote. The central bank's rate hikes in 1999 and 2000 showed such worries can drive regular hikes until the Fed is satisfied that demand has slowed to a sustainable pace, he added.

"We see an important parallel today: Concern about labor market overheating is likely to drive steady tightening untiul payroll growth slows to a sustainable pace, and there is still a long way to go," Hatzius wrote.

While increasing rates benefits banks such as Citigroup (C) - Get Report and JPMorgan Chase (JPM) - Get Report that pass hikes on to borrowers more quickly than depositors, they raise costs for borrowers with adjustable-rate loans such as mortgages and heighten the potential that corporate borrowers with low credit ratings may default.

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Slowing growth because of that could hinder future hikes. Alternatively, the Fed might slow down if less-than-expected payroll gains in March continue or the unemployment rate ticks back up 20 basis points, Song noted. Slower-than-expected delivery on President Donald Trump's tax plans or economic stimulus efforts -- a heightened possibility after his Republican allies were unable even to pass an Obamacare repeal -- represent another risk.

Still, even if interest rates were unchanged for the remainder of the year, lenders are benefiting from three 25 basis-point hikes from December 2015 through March. Net interest income at JPMorgan, the largest U.S. lender, is expected to climb about $4 billion this year without any more increases, CFO Marianne Lake noted on an April earnings call.