Stronger growth or a more rapid increase in inflation than the Committee currently anticipates would likely make it appropriate to raise the federal funds rate more quickly. Conversely, if the economy were to disappoint, a lower path of the federal funds rate would be appropriate.
Deposits continue to increase to record levels, in tandem with healthy growth in lending. And the quality of loans continues to improve even as non-performing loan ratios drop to record low levels. Equally important, banks continue to build strong buffers against systemic shocks and have kept their capitalization well-above the regulatory threshold.