The U.S. Federal Reserve kept interest rates unchanged on Wednesday (Jan. 31) but said inflation likely would rise this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell.

Reuters reported that the Fed, citing solid gains in employment, household spending and capital investment, said it expected the economy to expand at a moderate pace and the labor market to remain strong in 2018.

“Inflation on a 12-month basis is expected to move up this year and to stabilize” around the Fed’s 2% target over the medium term, the central bank said in a statement following a two-day policy meeting, the last under Fed Chair Janet Yellen.

It also said its rate-setting committee had unanimously selected Powell to succeed Yellen, effective Feb. 3. Powell, a Fed governor who has worked closely with Yellen, was nominated by President Donald Trump and confirmed by the U.S. Senate.

For the full story click here.