The FOMC meeting will be held this Wednesday.

According to the futures markets, the U.S. short term interest rates are expected to rise 25 basis points.

This will bring the 30-day Fed funds rate to 1.25% – 1.50%. The rate hike in December was long expected but the markets were until recently reluctant to price in the rate hike.

This partly comes from the fact that the U.S. inflation rate has remained rather subdued.

Even the Fed officials were divided with some members calling for the Fed to hold off rate hikes, while the hawkish camp made the case that inflation could overshoot the Fed’s 2% inflation target rate.

CPI Data & Quarterly Economic Projections

Besides the FOMC meeting the week ahead will also see the release of the monthly consumer price index data.

This comes a day after the Fed’s meeting.

Headline inflation is forecast to rise strongly by 0.4% on a month over month basis.

This represents a strong acceleration from the 0.1% increase that was seen in the previous month in October. Overall, the annual inflation rate is expected to push the CPI to 2.4% on the year.

Besides the rate hike, the FOMC is also expected to release its quarterly economic projections.

Members will also vote on the future path of rate hikes. Currently, investors are expecting to see the Fed pencil about three rate hikes for 2018.

There will also be a press conference held by Janet Yellen after the FOMC statement.