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Fed expected to raise rates by 0.75%, release dot plot projections

Yahoo Finance’s Jennifer Schonberger joins the Live show to discuss the expectations for Wednesday’s FOMC meeting.

Video Transcript

BRAD SMITH: All right, well, 75 basis points. That's what the Street is expecting to hear from Federal Reserve Chair Jerome Powell today. The latest rate-hike decision will be announced today at 2:30. And joining us on what we should expect from the FOMC meeting is Yahoo Finance's Jennifer Schonberger. Jen, good morning. You are live from the Federal Reserve in Washington. And so--

JENNIFER SCHONBERGER: Good morning. That's right, Brad, I am live here in Washington from the Federal Reserve. In this building behind me, policymakers are commencing the second day of their two-day policy meeting where they are widely expected to raise that benchmark interest rate by 3/4 of a percentage point when they conclude their meeting at 2:00 PM this afternoon.

In the face of stubborn inflation, officials expected to raise the Fed funds rate to a new range of 3% to 3 and 1/4% from 2 and 1/4% to 2 and 1/2%. This would mark the third 75 basis point rate hike in a row. An unprecedented move since the Federal Reserve has started explicitly targeting the Fed funds rate since the 1980s.

The Fed likely to signal that they will raise rates more aggressively. And expects rates to be higher for longer when they release that so-called DOT plot, which is the individual interest rate projections of each Fed official.

Now, markets expect the benchmark interest rate to rise above 4% by the end of this year, according to the CME Group. However, how high, how quickly, and how high rates remain at those levels remains uncertain.

Officials also expected to release new projections for inflation, unemployment, GDP, which will give us a clue into how they see the outlook for this economy and setting monetary policy, and how perhaps tighter policy will factor into that. We'll hear more from Fed Chair Powell this afternoon when he gives his press conference at 2:30. Guys.