The Federal Reserve is widely expected to raise its benchmark interest rate by a quarter-point on Wednesday,🐈 with the real question being what the central bank will do (or not do) to combat inflation for the rest of the year. 

Fed officials have heavily signaled they plan to continue their campaign o💦f anti-inflation interest rate hikes by raising the key fed funds rate♔ by a quarter-point to a range of 5.25% to 5.5%. 

Indeed, if the Fed did anything other than boost its key interest rate for an 11th time since March 2022—after a pause at its most recent meeting in June— it would come as a shock to markets: There’s about a 99% chance of a hike, according to the CME Group’s FedWatch Tool, which forecasts rates based on fed futures trading data. Whether that’s the final hike remains much more open to debate. 

The Fed has raised its benchmark interest rate from near-zero in an effort to discourage borrowing and spending, rebalance supply and demand෴, and curb consumer price increases that got as high as 9.1% year-over-year in June of 2022. 

By some measures, the effort is well on its way to success: the Consumer Price Index, a popular measure of inflation, has steadily cooled off, 澳洲幸运5官方开奖结♋果体彩网:sinking to a two-year low of 3% in🌌 June. It’s now within sight of the Fed’s goal of 2% that it views as consistent with a healthy economy.

A higher Fed funds rate hurts borrowers since it influences interest rates of many kinds of credit including credit cards, car loans, 澳洲幸运5官方开奖结果体彩网:and mortgages. Conversely, it tends to help savers by boosting returns on 澳洲幸运5官方开奖结果体彩网:high-yield savings accounts and 澳洲幸运5官方开奖结果体彩网:certificates of deposit, both of which are currently offering the highest rates in more than a decade.

Some economists believe there’s been enough progress against inflation that the next rate hike will be the last—and the Fed will refrain from further hikes for fear of slowing the economy too much and send it 澳洲幸运5官方开奖结果体彩网:sinking into a recession. Banks have also been getting 澳洲幸运5官方开奖结果体彩网:choosier about lending in the wake of this spring’s string of bank failures, pu꧙tting more drag on the economy.

Indeed, while Fed officials themselves have forecast another rate hike after this week’s meeting, many traders think they’re bluffing: Markets are pricing in the prediction that the Fed’s next move will be to reduce rates next year, rather than raise them again. 

“The Fed will continue to signal the prospect of further hikes, but with the credit cycle turning, we doubt it will carry through,” James Knightley, chief international economist at ING, and other ING economists, wrote in a commentary last week.

On the other ha🧔nd, the Fed has defied market expectations before. As economists at Deutsche Bank noted in a recent commentary, traders had mostly expected the March and May rate hikes to be the last, according to the FedWatch tool. 

“Even though the Fed will eventually stop hiking at some point, it’s worth remembering that markets have been previously caught out by not taking their more hawkish signals seriously, and then playing catchup afterwards,” Henry Allen,🍌 macro strategist at Deut﷽sche Bank, wrote in a commentary Monday.

The Fed’s next meeting is scheduled for September, by which point Fed officials will have two more rounds of official monthly reports on inflation and the job market to mull over—and that data will likely shed more light on what the central bank’s next move will be, economists said.