As stated in the minutes released from their December meeting, Fed officials are expecting corporate and personal tax cuts to bolster business and consumer spending. However, concerns still lingers about the unclear effect of the latest tax law.
Federal Open Market Committee members raised their forecasts for the 2018 Gross Domestic Product growth estimate to 2.5 percent from 2.1 percent.
The minutes of the meeting also stated that most of the members specified that eventual shifts within the federal tax policy compelled them to increase their estimates for the real GDP growth for the next few years.
Included within the ranks of the Federal Reserve is the Federal Open Market Committee, which is responsible for policy making. The committee present at the meeting voted to raise its standard interest rate a quarter point from 1.5 percent to 1.25 percent, basing their forecast from most of the consumer credit rates.
Most of the discussion as stated within the minutes of the meeting reveals robust observations on the economy. The gist of the meeting gives emphasis to significant upgrades in payrolls since the unemployment rate dropped to 4.1 percent and the industrial sector has quickly increased production.
Holiday spending was also described as strong in several Fed districts. Officials also observed that stock market prices increased as well, in which the S&P 500 increased approximately 20 percent.
At least some of the recognition, especially for the market gains, went to the anticipation of the Republican tax overhaul. The Congress has not yet passed the measure following the FOMC meeting last December 12 to 13. The Tax plan, now passed as a law, cuts corporate taxes to 31 percent from 35 percent, it also slashed income tax brackets for most of the taxpayers.