In its first policy meeting with Chairman Jerome Powell at the helm, the Federal Reserve moved as expected when it raised interest rates by 25 basis points this week. And while the Fed's two-day policy meeting offered no big surprises to jolt markets, the central bank did make news when it raised its GDP forecast and indicated that future rate hikes could be more aggressive within the next year.

Markets fully priced in the possibility of the Fed raising interest rates, a move that tightens borrowing costs for banks and consumers and affects rates on mortgages and credit cards. Policymakers use interest rate increases to manage economic growth and prevent it from skyrocketing.

The decision to increase rates — the sixth time the Fed has made such a move since December 2015 — comes as the U.S. labor market continues to grow stronger and inflation begins to rise, albeit moderately.

Here are three other takeaways from the Fed's meeting this week.

1) The economy is strong. Real strong.

The Fed remains optimistic about the economy's performance. In a prepared statement, the central bank remarked that its economic outlook has strengthened in recent months.

Why? Unemployment is historically low. Hiring is gaining momentum. Inflation is starting to rise.  Experts believe fiscal stimulus generated by the $1.5 trillion tax cut will lift the economy, generate more demand and spur increased business investment — all good signs of economic vitality.

After the meeting, Powell told reporters that, despite the rampant growth, the economy is not in danger of overheating. Officials raised their growth estimates for gross domestic product in 2018 from 2.5 percent in December to 2.7 percent. They increased their 2019 estimates from 2.1 percent to 2.4 percent. Inferring that growth could slow in subsequent years, officials kept their 2020 forecast the same at 2 percent and estimated they would raise rates twice that year.

2) Powell is just as cautious as Yellen

Following in the steps of his predecessor Janet Yellen, Powell upheld the Fed's philosophy of gradual, steady rate increases and avoided commenting on political controversy, such as the Trump administration's tariffs policy. Powell did say that fiscal stimulus would likely increase demand, and that tax cuts may result in greater business investment.

3) Don't look for a fourth rate hike

Even before the Fed met this week, we already knew it planned to increase rates twice more this year. As of now, that's not changing.

The Fed made no indication that it's planning a fourth rate increase this year to cool the economy, despite rampant speculation from Wall Street economists that an extra rate hike is on the horizon. "We've made one decision at this meeting and that decision was to raise the federal funds rate by 25 basis points," Powell said.

Here's something that might change: Interest rate increases next year. The central bank said Wednesday it's increased its rate hike projections from two to three, suggesting that it may adopt a more aggressive pace of rate hikes in coming years.

Analysts: Why a fourth rate hike is a bad idea

Not everyone is excited about the prospect of a fourth rate hike. Some analysts say an extra increase is unnecessary because a rise in an important short-term borrowing rate has already tightened financial conditions, the Wall Street Journal reports.

The Libor, or the three-month U.S. dollar London interbank offered rate — the cost for London's banks to borrow money in U.S. dollars  — has risen to its highest level since 2008. This is happening as the U.S. is stepping up its issuance of short-term bills, and while changes to how corporations' overseas profits are taxed have urged them to restructure and move bond holdings.

The increase is boosting borrowing costs for many consumers and borrowers, which has the same effect as the Fed raising rates and tightening monetary policy. Analysts at Bank of America Merrill Lynch said this week that the rise in Libor "has effectively tightened financial conditions by the equivalent of an additional rate hike," the Journal reports.

Adding another rate hike could tighten the market more quickly, scare investors and send U.S. bond yields and the dollar higher — causing mortgage rates to increase, according to strategists with BMO Capital Markets.

"The case for four (increases) is far from certain and it will look erratic and be embarrassing if subsequent data force them to pull back," Steven Englander, head of research and strategy at Rafiki Capital Management said. "There is no upside to having the market now price in a more hawkish outcome than subsequently emerges."

Trade fears slam stocks

President Donald Trump made what could be an opening salvo in a trade war with China when he imposed $60 billion in tariffs on Chinese goods and restricted the country's ability to invest in the U.S. technology industry on Thursday.

Trump claimed the move was in retaliation to Beijing's history of forcing U.S. companies to relinquish trade secrets to do business with China, the Washington Post reported. He also condemned China for the loss of 60,000 factories and 6 million jobs in the U.S., and bemoaned America's "out of control" trade deficit with the economic superpower.

The president also accused the Chinese of using intimidation and unfair trade practices to acquire U.S. technology. Trump presented the tariffs as the solution to closing the gap with China and being tougher where other administrations weren't. The White House said the tariffs will have "minimal impact" on consumers, although critics sharply disagree.

The announcement rattled U.S. stocks, which fell on fears of an impending trade conflict. The Dow Jones shed more than 720 points while the S&P 500 fell 2.5 percent. The Nasdaq also tumbled 2.3 percent. The 10-year Treasury yield saw its biggest one-day drop since September, according to CNBC, while bank stocks fell sharply.

Expect market volatility to continue for some time as the markets sort out all the information. There has been a "flight to safety" as the 10 year has rallied to the low 2.80s. Don't expect this to last long as the market will eventually focus on economic fundamentals.

Get in front of your borrowers now and have them lock in while the current chaos is driving rates lower.

In other mortgage news…

• Existing home sales rebounded in February, unexpectedly rising by 3 percent month-over-month. The recovery suggests real estate investment in the first quarter was steady and robust despite the affordability headwinds prevalent in the market.
• Refinance applications fell 1.1 percent, according to data from the Mortgage Bankers Association. The refinance share of mortgage activity fell again, continuing to fall below its lowest levels since 2008.
• Home prices jumped in January, increasing 0.8 percent from December and rising faster than the levels of increase observed at the end of 2017, according to the Federal Housing Finance Agency.