CBO believes the Fed should raise interest rates this year, disagreeing with Wall Street

Forecasts in the CBO report indicate that GDP is likely to increase by 2.3 percent in 2019, but slowly thereafter and set a 1.7 percent level in 2020-23. It is actually below Fed expectations, as for a 2.3 percent gain in 2019 followed by 2 percent and 1.8 percent in recent years to a long-term trend of 1.9 percent.

The report notes that the Fed must guard against a "production gap" or the difference between actual GDP and potential.

As the economy grows faster than its ability, pressures on supplies put pressure on inflation. CBO expects the gap to remain positive until 2022, when it becomes negative and then falls.

"A positive output gap indicates that the demand for goods and services temporarily exceeds the maximum sustainable capacity of the economy to deliver them, leading to increased demand for labor and upward pressure on inflation and interest rates, the report said.

Fed has The task of keeping inflation around 2 percent, even though officials have indicated that the target is "symmetrical", which means they would not be careful if it exceeded or undermined the mandate by a small margin. has now measured the fund rate in a range between 2.25 and 2.5 percent.

Markets expect almost no chance of an interest rate hike this week's Federal Open Market Committee meeting, the likelihood is slowly rising throughout the year, with traders pricing in a 22 percent chance of an increase in December, according to CME's futures trading tracker.