The Fed Is Expected to Hike Rates by a Quarter Point

The US Federal Reserve is broadly expected to hike interest rates by 25 basis points Wednesday,

even as concerns about the US banking system persist.

Markets also anticipate the central bank will release projections about the economy and the future path of rate hikes, even though some economists contend it could prove difficult to issue realistic forecasts due to the high level of uncertainty prevailing.

Investors are looking for assurances from the Fed that the issues of Silicon Valley Bank and Signature Bank are a thing of the past and that any spillover to regional banks will be contained.

Most economists expect the Fed will raise its target rate range from 4.75% to 5% on Wednesday. A minority of market watchers think the central bank could pause its hikes due to concerns about the banking system.

The central bank is weighing up by using its interest rate powers at the same time it is trying to

soothe markets and stop further bank runs. There is rising fear that increasing rates could put

further pressure on banking institutions and further throttle lending, hurting small businesses and other borrowers.

After dealing with banking matters in its own backyard, the Fed last week joined with other global central banks to boost liquidity, after Swiss bank UBS agreed to buy its embattled counterpart Credit Suisse.

Investors will be looking for assurances from Fed Chairman Jerome Powell that the central bank can contain banking problems as they arise, even if the broader macro data shows some further rate tightening is warranted.