Fed facing a blurrier economic outlook as it weighs rate hike

The Federal Reserve is grappling with a hazier economic picture clouded by turmoil in the banking industry and still-high inflation just as it meets to decide whether to keep raising interest rates or declare a pause, according to a report from the Associated Press.

Yet the Fed will not only have to decide whether to extend its year-long streak of rate hikes despite the jitters roiling the financial industry. The policymakers will also try to peer into the future and forecast the likely path of growth, employment, inflation, and their own interest rates.

Those forecasts will be released Wednesday, when most economists expect the Fed to announce a relatively modest quarter-point hike in its benchmark rate, its ninth hike since March of last year.

The projections this time will be particularly difficult. In their most recent forecasts in December, Fed officials projected that they would raise their short-term rate to about 5.1%, roughly a half-point above the current level. Some Fed watchers expect the policymakers on Wednesday to raise that forecast to 5.3%.