Fed to Hike and Steepen Its Rate Policy Path: Decision-Day Guide

The Federal Reserve is poised to raise interest rates Wednesday for the first time since 2018, with investors focused on how aggressive central bankers plan to be in tackling the hottest inflation in four decades.

The Federal Open Market Committee is all but certain to raise rates by a quarter percentage point at the conclusion of its two-day policy meeting, after Chair Jerome Powell told lawmakers earlier this month that he favored such a move.

The panel will release a statement and forecasts, including the “dot plot” chart that displays central bankers’ projections on interest rates, at 2 p.m. in Washington. Powell will hold a virtual press conference 30 minutes later.

“They want to send a reassuring message that they absolutely have the resolve to cool off inflationary pressures and can go faster if they need to, or slower,” said Julia Coronado, president of MacroPolicy Perspectives. “They are trying to achieve macroeonomic stability, an extremely difficult job right now.”

Fed Forecasts

The FOMC’s fresh forecasts are likely to project four interest-rate hikes in 2022 and three in 2023, according to economists surveyed by Bloomberg. That would be up from three increases this year flagged in its December dot plot. Yet there’s quite a bit of uncertainty over the committee’s thinking and markets are pricing in seven rate hikes in 2022, or one every meeting.