The Federal Reserve will keep interest rates near zero and continue its $120 billion bond-buying program despite fears regarding inflation. The bank raised its prediction for 2021's inflation rate, but it ultimately believes the increase in consumer prices will be temporary.

Fed Chairman Jerome Powell theorizes that the current spike in prices is being driven by surges in demand from freshly-vaccinated consumers. He predicts that rates of inflation will fall once things return to normal. The Fed's decision to keep pumping funds into the economy is meant to support and accelerate that post-COVID economic recovery.

"We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery," Powell told reporters following the Wednesday meeting.

In March, Fed members predicted that the economy would grow by 6.5% this year. Now, they predict it will grow by 7%.

Due to its positive outlook on the economic recovery, the Fed has also moved up its predicted timeline for increases in interest rates, causing stocks to take a tumble on Wednesday. Despite the fact that they usually accompany a thriving economy, increases in interest rates are generally bad for stocks because they increase borrowing costs for businesses.

Powell tried to calm down investors by reassuring them that the interest rate hikes are "well into the future," and tied those hikes to an increase in employment. Currently, there is a glut of jobs on the market, but employers aren't hiring very quickly. Powell theorized that this is due to a "speed limit" on how quickly people can find new jobs now that those who were temporarily let go have returned to work.

13 out of the 18 members of the Fed's rate-setting committee now predict that there will be a rate hike in 2023, up from the seven members who felt this way in March. Seven of the 18 members believe that a rate hike could come within the next year, compared to four members in March.

Of course, not everyone agrees with the Fed's decision to maintain its current stance. Some fear that skyrocketing demand could lead to long-term deflation in the long run. Powell, however, doesn't see this as an issue for today.

"The problem now is that demand is very strong, incomes are high, people have money in the bank accounts. Demand for goods is extremely high, and it hasn't come down," Powell told reporters. "But in terms of overcorrecting, there is a possibility on the other side of this that inflation could actually be quite low going forward. But that is not where our focus is right now."

Powell made sure to clarify that the Fed is set in stone on this course of action. While Powell suspects that supply will rise to meet demand in order to bring down prices, there's no way to know for sure when that might happen.

"If we see inflation moving up in a way that is really materially above what we would see as consistent with our goals, and persistently so, we wouldn't hesitate to use our tools to address that. We do not expect that though," Powell said.