As was widely predicted in the markets, the Federal Reserve on Wednesday said it would raise the federal funds rate a quarter-point to a range of 4.5% to 4.75%. The smaller increase from the Fed’s Federal Open Market Committee followed a half-point increase in December, which in turn followed four consecutive rate increases of 0.75 points each. 

“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” according to the FOMC statement. 

The question now is what the Fed will do next, i.e. how long it will continue raising the benchmark rate, and how large the increases will be. “They’ll likely do another 25 [basis points] at the March meeting and that’s when the cycle comes to end,” Tom Porcelli, chief U.S. economist at RBC Capital Markets, wrote in a client note cited by CNBC.  

He added, “We see incredibly limited scope for the Fed to plausibly justify keeping this cycle going deeper into the year with what will already be a very restrictive policy stance in the face of what are likely mounting economic challenges to the backdrop.”