By now, everyone knows the Fed wants to hike interest rates Wednesday, but what is not known is what central bank officials think about future rate increases this year.
Friday's strong jobs report was the whipped topping on a parfait of strong indicators for the Fed. In the coming week, February retail sales and the consumer price index will both be important, but the Fed already has above-trend job growth of roughly 235,000 in both January and February, and hourly wage gains of a respectable 2.8 percent.
The Fed is expected to raise the fed funds target range by a quarter point, which would put it between 75 basis points and 1 percent. That move would directly impact short-term borrowing costs, but the Fed's rate moves are like a domino effect and will send even longer-term rates higher. Those rates affect everything from car loans to mortgages, and commercial loans.
When the central bank unfurls it's new forecasts Wednesday, the market will be looking to see if there's an adjustment in its collective interest rate outlook, which now points to three quarter-point rate hikes this year. The market has looked skeptically at these forecasts since the Fed began 2016 with forecasts pointing to four hikes, and ended the year with just one rate rise in December.
But in recent weeks, Fed officials mobilized a campaign to tell the markets it's time to hike and they could move in March, while expectations were for a June rate increase and then possibly one other this year. The market got on board with a March hike and is warming up to three increases for 2017.