Federal Reserve officials raised interest rates for the firsttime this year and forecast a steeper path for borrowing costs in2017, saying inflation expectations have increased “considerably”and suggesting the labor market is tightening.

The Federal Open Market Committee cited “realized and expectedlabor market conditions and inflation” in increasing its benchmarkrate a quarter percentage point, according to a statement Wednesdayfollowing a two-day meeting in Washington. New projections showcentral bankers expect three quarter-point rate increases in 2017,up from the two seen in the previous forecasts in September, basedon median estimates.

The central bank said monetary policy supports “some furtherstrengthening in labor market conditions and a return to 2 percentinflation,” adding the word “some” in an indication that officialssee less room for improvement in the job outlook. The word“strengthening” also replaced “improvement.”

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