The Federal Open Market Committee raised the target range for the federal funds rate from 1.25% to 1.5%.

In its rationale, the committee explained that inflation over the next 12 months is expected to remain below 2% but eventually stabilize at 2%. The committee also said it expects moderate expansion of the economy and continued strength in labor markets.

The committee said it expects “economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate” but that “the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”