The U.S. economy continues to strengthen, the Fed indicated, and it no longer needs the historically low interest rates that were put in place in the aftermath of the financial crisis to stimulate growth.
Negative for gold though is that the central bank also forecasts tame inflation pressures throughout year.
After two rate hikes in 2018, investors are focusing on the Fed's updated projections for increases during its remaining meetings for the year. The unemployment rate in May was 3.8%, the lowest since 2000 and 1969, while inflation was just below the Fed's 2% target.
Powell faces a tricky balancing act as the Fed attempts to bring interest rates toward historical averages. The rate is estimated to fall 3.5% next year, through to 2020, down from the previous forecast of 3.6%.
Stay tuned to FOX Business for coverage of Powell's remarks starting at 2:30 p.m. ET. The Fed is looking for interest rates to rise to 3.4% by 2020, unchanged from the previous forecast. That compares with March's forecasts for 3.8 percent this year and 3.6 percent in the following two years. Estimates of the long-run sustainable unemployment rate were unchanged at 4.5 percent.
The Fed's short-term policy rate, a benchmark for a host of other borrowing costs, is now roughly equal to the rate of inflation, a breakthrough of sorts in the central bank's battle in recent years to return monetary policy to a normal footing.
Core inflation projections, which strip out volatile food and energy prices, is expected to tick slightly higher to 2.0% this year, up from March's projection of 1.9%. The index rose 1.8 percent in April from a year earlier.
USA central bankers again emphasized on Wednesday that the goal is "symmetric", and they said in minutes of the May meeting that "a temporary period of inflation modestly above 2 percent" would help anchor long-run inflation expectations around the target. Economic activity is projected to expand 2.4% in 2019, unchanged from the previous forecast; finally, the economy is expected to grow 2.0% in 2020, unchanged from the previous forecast. The committee's forecast for the long-run sustainable growth rate of the economy held at 1.8 percent, suggesting policy makers are skeptical of the effect of tax cuts on the economy's capacity for growth.