The cost of borrowing in the U.S. is going to get more expensive this week — and higher inflation is to blame.

The Federal Reserve on Wednesday is widely expected to increase a key short-term interest rate that influences the cost of mortgages, auto loans and other forms of borrowing. The central bank began to lift its benchmark rate from near zero at the end of 2016 with the aim to bring it to nearly 3% in next few years. Right now the rate is at the midway point.

The goal of the Fed is to keep the economy expanding, but not so fast that it drives up inflation. Easier said than done, though.

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Consider the labor market. The U.S. has added so many jobs in the past five years that the unemployment rate has fallen to an 18-year low of 3.8%. And there’s actually more job openings nationwide than the number of unemployed Americans looking for work.

Great news for working Americans, but the tight labor market is forcing companies to increase pay even though employees are not much more productive at work. That’s a recipe for inflation.

What’s also a recipe for inflation are higher oil prices US:CLN8 , rising medical costs and expensive home prices in competitive real-estate market.

The Fed’s preferred tool to measure inflation, the PCE price index, hit the central bank’s 2% long-run goal in March and remained there in April. The index had almost fallen to zero in 2015 before beginning to climb out of a three-year rut.

Another important inflation barometer is even higher. The consumer price index rose to a yearly rate of 2.5% in April and is likely to hit a six-year high later this year, perhaps even touching 3%.

The CPI for May, released Tuesday, is forecast to rise to 2.7% on a 12-month basis. That would match a six-year high and put consumer inflation within striking distance of 3%.

Nor is inflation likely to fall much, if at all, in the upcoming months.

The labor market is only getting tighter, for one thing. Oil prices typically head higher during the summer driving season. Housing is still expensive. And medical costs are creeping higher again after a surprising slowdown in 2017.

Inflation hasn’t risen enough to hurt consumers much, though. Higher pay has offset some of the increase in inflation and a strong economy has Americans feeling better than they have in years. Sales at U.S. retailers probably increased again in May, suggesting that growth domestic product could top 4% in the spring.

The stage has been set “for a significant pick-up in growth in the second quarter as a whole,” Capital Economics said.

Even the potential for a bigger flareup in trade spats between the Trump White House and the rest of the world probably won’t dampen the economy in the short run.