The model currently indicates that the effective Fed funds rate is nearly in line with the model’s estimate for an equilibrium rate. In other words, the Fed funds rate is more or less appropriate for current conditions. But given fast-moving events in Washington lately, the definition of “appropriate” could evolve quickly.

Federal Reserve officials are taking note of what they see as rising inflation risks and the uncertain impact of President Donald Trump's trade, immigration and other policies.

Federal Reserve officials at a meeting last month pointed to rising risks that inflation could worsen, a key reason they kept their benchmark interest rate unchanged.