Here's what to expect from today's Federal Reserve announcement

cnbc.com:

There won't be a lot of mystery surrounding what the Federal Reserve is going to do Wednesday with interest rates. Where the intrigue comes in is how the central bank proceeds from here.

Markets have priced in a near-100% probability that the rate-setting Federal Open Market Committee will approve a quarter percentage point increase at the conclusion of the two-day meeting. That will mark the 10th increase since March 2022, taking the Fed's benchmark borrowing rate to a target range of 5%-5.25%.

For investors, the hard part will be what happens next: Does the Fed signal that it's done hiking, or will it leave open the option of tightening even more if it judges that more needs to be done to fight inflation?

«What's most important is how they convey the potential for a pause going forward,» said Collin Martin, fixed income strategist at Charles Schwab. «How do they do that while also probably leaving the door open a little bit? That will be a balancing act between suggesting a pause is in the cards but still is dependent on incoming data should inflation turn higher going forward.»

Multiple factors will come into play as Fed Chairman Jerome Powell and his colleagues point to where monetary policy is heading.

Inflation has been at the forefront of official thinking. Recent indicators point to a softening but only to a level that is still well above the Fed's 2% target.

For instance, the Dallas Fed compiles a gauge called the «trimmed mean» for personal consumption expenditures that essentially throws out high and low readings. That is showing annual inflation around 4.7% in March, little changed since August 2022 and up from a 3.9% pace in March 2022. The consumer price index was at 5% in March, compared to 8.5% a year