The Federal Reserve is widely expected to raise its fed funds target rate by a half-percentage point Wednesday, but investors will be more focused on whether it signals it could get even more aggressive with future rate hikes.

The Fed is also expected to announce the start of a program to wind down its roughly $9 trillion balance sheet by $95 billion a month, starting in June. The 50-basis-point hike would put the fed funds target rate range at 0.75% to 1%.

That fed funds target rate after this week’s hike would be well off zero, but way below the market’s expectations for a funds rate above 2.8% by the end of this year.

The central bank’s communications will be key, given the slowing in some economic data while inflation is still hot. Economic growth contracted by 1.4% in the first quarter, but economists say it was distorted by trade data and they expect second-quarter gross domestic product to bounce back.

“I think they’re going 50 [basis points], and it seems like they’re dead set on hiking rates enough to kill inflation,” said Jim Caron, chief fixed income strategist on the global fixed income team at Morgan Stanley Investment Management. “But that’s the real debate. Are they trying to get to target inflation by 2024? If they are, the wage inflation is pretty high and that will require even more tightening than the Fed is projecting.”

The Fed’s forecast shows it expects core personal consumption expenditures inflation to reach 2.3% by 2024 and move back to the Fed’s 2% target over the longer run. Central bank officials also forecast a fed funds rate of 1.9% for this year and 2.8% for 2023 and 2024 in their March projections. The central tendency in the Fed’s forecast for the funds rate for 2023 was between 2.4% and 3.1%.

The central bank does not release its next quarterly forecast until the June meeting, so much of what the market will hinge on will come from Fed Chairman Jerome Powell. Powell briefs the media following the 2 p.m. ET release of the statement.

The futures market is pricing in a fed funds rate of 2.82% by the end of this year, which would take roughly 2.5 percentage points of hiking in 2022. Traders are betting on a 50-basis-point hike this week, as well as close to 50 or more for each of the next three meetings in June, July and September.

“The cross winds are so tough. I think the fundamental question is clear. It’s just how quickly inflation comes down or does the Fed accelerate tightening in the next four to five months?” said Wells Fargo’s Michael Schumacher.

Consumer price inflation jumped 8.5% in March. While economists say inflation could be peaking, how quickly it drops will be the key to the Fed’s rate path.

“The Fed will have to look at the situation and say inflation is off, it’s falling. Is it falling rapidly enough?” Schumacher said.

“A lot of policy makers say they want to get to neutral by the end of this year — 2.50% plus, and the market is priced for the Fed to be above neutral — 3.30% by the middle of next year. That’s too low I think. There’s a lot of people out there saying fed funds have to go much higher,” he added.

Strategists say the markets are bracing for a hawkish Fed. However, if the central bank delivers what is expected without emphasizing more aggressive hiking, it could be perceived as dovish. That means bond yields, which move opposite price, could come down after the meeting and stocks could move higher.

“What the market is really going to care about is the outlook for hikes and particularly the possibility of 75 basis points,” said Mark Cabana, head of U.S. rates strategy at Bank of America. Traders have been speculating the Fed could up the ante with an even bigger rate hike at the June meeting.

JPMorgan’s economists said there is a 1 in 5 chance of the Fed raising rates by 75 basis points this week, though the market is not pricing in that possibility.

While the Fed is not expected to provide much clarity about the pace of its hiking, Powell could be asked about it during his briefing.

“He is not going to support or dismiss the idea of 75,” said Cabana. The chairman is likely to follow the script from the last meeting, when the Fed raised rates by a quarter point. That was the first hike since 2018.

“We think he is going to try to be as noncommittal as possible, similar to how he sounded last time,” Cabana said.

Rick Rieder, BlackRock’s chief investment officer of global fixed income, said he expects the Fed to raise rates by a half-percentage point Wednesday, but at some point in the future the central bank could speed up its hiking if it felt the need to get to neutral faster.

If the Fed clearly communicated its intention, the markets could take quicker tightening in stride. “They could accelerate the pace and go faster, and then they could pivot,” he said.

Since the last meeting, the outlook for the economy has deteriorated and markets have thrown a tantrum. Fed officials have been far more outspoken about their determination to fight inflation with rate hikes, and that has injected more fear of an economic downturn into markets.

Rieder said he does not foresee a recession this year because the economy is too strong. “I don’t think we’re going into any near-term recession. The data is still solid,” he said. But Rieder added that it is slowing, and there could be a recession in 2023. “I think any recession we see in the next couple of years is going to be shallow unless there’s an exogenous shock.”

The S&P 500 was down 8.8% in the month of April, while bond yields have shot higher. The 10-year Treasury yield hit a high above 3% this week, while it was at 1.66% in the week going into the last Fed meeting in March. The 10-year was at 2.95% Tuesday.

Strategists do not expect the Fed to be concerned about either the stock market’s sell-off or the run up in bond yields. “They want to be tightening financial conditions. That’s part of the story,” said Cabana. He expects Powell to say tightening was not unexpected.

“He will say the economy is still strong, and the Fed getting prices back in check is paramount,” said Cabana. Powell is also likely to press that the Fed sees a soft landing for the economy, though the market will remain skeptical, he added.