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With Fed expected to hike, attention turns to what it says

FILE - In this Thursday, Nov. 17, 2016, file photo, Federal Reserve Chair Janet Yellen testifies on Capitol Hill in Washington, before the Joint Economic Committee. A full year after the Federal Reserve raised a key interest rate for the first time in nearly a decade, it is widely expected that they are finally ready to raise rates again at their final meeting of 2016. But the real anticipation revolves around how the central bank plans to respond to the political tsunami that voters have delivered with the election of Donald Trump. (AP Photo/Susan Walsh, File) FILE - In this Thursday, Nov. 17, 2016, file photo, Federal Reserve Chair Janet Yellen testifies on Capitol Hill in Washington, before the Joint Economic Committee. A full year after the Federal Reserve raised a key interest rate for the first time in nearly a decade, it is widely expected that they are finally ready to raise rates again at their final meeting of 2016. But the real anticipation revolves around how the central bank plans to respond to the political tsunami that voters have delivered with the election of Donald Trump. (AP Photo/Susan Walsh, File)

By Associated Press December 12, 2016 5 min read

WASHINGTON (AP) – There isn’t much doubt about what the Federal Reserve will do when its latest policy meeting ends Wednesday: It’s all but certain to raise its benchmark interest rate – its first increase in a year.

The real anticipation surrounds what Fed officials may or may not say about the pace of future rate hikes against the backdrop of Donald Trump’s election.

Will they signal that they expect to raise rates very gradually in the coming year? Or will they say the risk of high inflation resulting from Trump’s tax and spending plans may require accelerated rate hikes?

On this, economists and investors agree: The Fed will raise its key rate by a modest quarter-point to a range of 0.5 percent to 0.75 percent – a move that will likely lead to slightly higher rates on some consumer and business loans. The Fed last increased rates last December, when it raised its benchmark rate from a record low set at the depths of the 2008 financial crisis.

“Never has the Fed telegraphed a rate hike as thoroughly as this one,” said David Jones, chief economist at DMJ Advisors.