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This week, U.S. Federal Reserve policymakers are widely expected to increase interest rates by 50 basis points (bps). The Fed will also release new economic and interest rate forecasts of its members ahead of a press conference by Fed Chair Jerome Powell, which could give investors a sense of the future of inflation and interest rates.

The Fed meeting follows the Labor Department’s blistering report on Friday that its Consumer Price Index (CPI) rose at an annual rate of 8.6% in May, a new 40-year high. Also, the University of Michigan’s survey of consumers’ long-term inflation expectations rose to its highest level since 2008. 

The inflation data raised concerns about whether the Fed will need to get more aggressive in hiking interest rates, with chances of a 75-bp rate hike seen rising.

Both Barclays and Jefferies changed their forecasts Friday to include a 75-bp hike for this week, though most economists expect 50 bps. Goldman Sachs economists revised their forecast to include a 50-bp increase in September on top of 50-bp hikes on Wednesday and in July.

“Fed Chair Jerome Powell and the FOMC have been fairly transparent about the pace and size of upcoming rate hikes, and the Fed’s dot plot shows a similar consistency. A rate hike of 75 basis points this week would be highly out of character, and would signal that the Fed does not have a strong plan to combat inflation,” stated Caleb Silver,” Editor in Chief of Investopedia.

Ahead of the Fed’s announcement, there will be one more key inflation data point due: the May Producer Price Index (PPI), which will be released on Tuesday. It is expected to show wholesale prices increasing 10.9% year-over-year, after a rise of 11% in April.

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