The US central bankers on Wednesday are poised to take the first step to raise the benchmark interest rates in an attempt to curb the rising inflation before it surges out of control.

With the US inflation hitting the highest level in four decades and the labour market tight, Fed Chair Jerome Powell has already given a hint for a 25 basis points hike in the benchmark interest rate, the first since 2018.

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The Federal Reserve will release a statement and updated economic forecast at 2 pm Eastern Time Zone. Powell will address a press conference at 2:30 pm.

Here are four things to watch out for:

1) How many hikes will the Fed plan?

In December, the Fed projected three quarter percentage point rate hikes this year, three more in 2023 and two more in 2024. The total of eight quarter-point hikes would raise the Fed’s policy rate to 2.1%, just below its “neutral” rate, which neither boosts nor restricts growth. In contrast, the market now expects seven quarter-point hikes this year.

Economists think the Fed will “tread carefully” and only add a couple of more hikes for this year said Derek Holt, head of capital market economics at Scotiabank.

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Jefferies’ economists see the Fed hiking rates five times this year and five times in 2023. If the Fed indicates they will move interest rates into “restrictive” territory, above 2.5%, that will be a hawkish sign.

The Fed isn’t expected to enter a restrictive stance anytime soon, but many economists believe that it is inevitable.

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2) Powell’s view on the impact of the Russia-Ukraine war

In recent comments, Powell has stated that the war poses risks to the outlook for the US economy but has not given much detail. Some economists believe that the conflict will make Fed more dovish, while others the Fed will be hawkish.

According to Tom Simons of Jefferies, if Powell plays down the geopolitical risks, that will be hawkish.

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3) How will it address inflation?

Economists expect Chairman Powell to be in inflation-fighting mode. “Inflation has to be job one at this point,” said Stephen Stanley, chief economist at Amherst Pierpont.

He will emphasize that if inflation doesn’t peak soon and starts to moderate, the Fed may be able to move faster.

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4) Fed’s plans to shrink its balance sheet

The Fed’s balance sheet rose two folds to almost $9 trillion during the pandemic. Shrinking is another way of reducing monetary stimulus from the economy. Experts are divided about how much detail the will Fed provide on its plans.

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According to Deutsche Bank, the Fed will give specifics on how rapidly it will allow the portfolio to shrink, setting up an announcement of the start of the program at the Fed’s next meeting in early May. While others believe the Fed will wait until June or July to start.