With a new year looming, the SIFMA Economic Advisory Roundtable released its forecast for 2016 this week, and the prospects for growth are tied closely to the machinations of the Federal Open Market Committee.

Despite a widely expected rise in the federal funds rate on Wednesday, the roundtable forecasts 2.5% in U.S. GDP growth next year with a return of inflation to the economic picture.

“The theme of the year is that slow and steady wins the race,” said the chairman of SIFMA’s Economic Roundtable, Ethan Harris, co-head of global economics research at Bank of America Merrill Lynch.

Harris sees as milestones being reached as the economy continues to get healthier.

“One of the milestones is full employment,” Harris said. “Another milestone is that we are finally going to get some inflation. This is a sign of a normalizing economy.”

That stands in stark contrast to Europe, which still faces deflation and slack employment.

Policy issues, the SIFMA roundtable said, could influence the economy, with respondents citing corporate tax reform as the issue that could have the most impact on the economy.

The biggest potential obstacle to economic growth was the impact of financial regulatory policy, with a large majority expecting a negative impact, just 14% expect no impact.

Harris noted that capital spending by businesses still lags, but is expected to increase in 2016 by 3.7%.

(Related on ThinkAdvisor: 5 Key Economic Trends for 2015: SIFMA)

  1. The Economy

Prospects for the economy have improved since SIFMA’s mid-year forecast in June, with 2015 GDP expected to come in 2.5% over last year and grow at the same rate next year.

  1. Monetary Policy & Fed Rate Hike

A bump in the interest rate by the Fed is expected, with over 90% of respondents saying the first hike will be 0.25%. Key factors for the Fed’s move include the improving labor market and the expectations about financial developments and inflation. Still, one respondent noted that the economy is still fragile, particularly overseas.

  1. Interest Rates

A rise in 10-year Treasury rates is widely expected with the 2.43% figure this month rising to 2.70% a year from now. An overwhelming majority of respondents said the yield curve would flatten by midyear, meaning short-term bonds would see yields more than those for long-term instruments.

  1. Unemployment

The job market is expected to continue to improve with the unemployment rate forecast showing a fall from 5.3% to 4.7% by the end of 2016, slightly better than the June numbers offered by the roundtable.

  1. Inflation & Spending

Inflation, as measured by personal consumption, is expected to end 2015 flat at 0.3% over last year. Some improvement on the weak numbers is expected in 2016, with a rise of 1.4% forecast over this year.

  1. Oil Prices

Oil prices have dropped to about $36 a barrel in recent weeks, but the roundtable sees a 40% chance of them bouncing back to between $41 and $50 by midyear. Three years from now, the price of a barrel is forecast to be about $64 per barrel if the global economy grows at a moderate rate. The roundtable expects the price of oil to have no impact on economic growth.