What to expect from Jerome Powell today as markets brace for another rate hike

Will Jerome Powell announce a 75-basis-point hike in the key US interest rate later today? The Fed's rate-deciding panel — the Federal Open Market Committee — will reveal what's in store for the world's largest economy at the end of two-day meeting deliberations on Wednesday. This comes as the US central bank scrambles to tame the steepest surge in consumer prices in 40 years but avoid a slowdown.

That at a time when many economists have flagged the risk of a global recession.

A majority of economists in a poll by Reuters expect the FOMC to announce a 75-basis-point hike on Wednesday. About 19 percent of them see an increase of 100 bps.

A 75-bp hike will be a third such revision in a row.

The outcome of the Fed policy meeting will set the tone of interest rates in the rest of the world. Any revisions in the US central bank's forecast for inflation and the economy, and clues on the future path of rates will be watched closely.

All eyes will be on Powell's speech to assess how hawkish the US central bank is this time around.

The Fed Chair has already highlighted the importance of curbing inflation before the public gets used to higher prices. Earlier this month, he said expectations played an important role and were a critical reason inflation was so persistent in the 1970s and 1980s, vowing his commitment to bring rising prices under control.

Underlying consumer inflation is broadening out in the US rather than cooling as expected by many economists. Here are two key points to remember to add context to Wednesday's announcements:

Consumer inflation stood at 8.3 percent in August vs expectations of 8.1 percent; core inflation came in at 6.3 percent vs expectations of 6.1 percent

US GDP shrank 0.9 percent in July-September following 1.6 percent contraction in previous month — known in economic parlance as technical recession

Here's what to expect from the upcoming monetary policy announcements from the US:

Materialising upside inflation risks will likely result in the US central bank raising rates by 100 bps, Aichi Amemiya of Nomura told CNBC-TV18. That is above the brokerage's previous forecast of 75 bps, he said.

Nomura continues to expect Wednesday's policy action to be followed by a 50 bps hike in November.

Some believe the Fed needs to do more if consumer prices continue to be sticky.

“If inflation is more stubborn than we think and if more action is needed to tighten financial conditions, the Fed will have to go higher, but right now, the baseline is the low fours," Paul Gruenwald of S&P Global Ratings told CNBC-TV18.

"Central banks are behind the curve, especially in the advanced markets... US inflation is still printing quite strong. We are way above the two percent target. So the Fed is barely neutral. We think they have got more work to do perhaps a terminal rate of greater than four percent. So (a) 75 bps (increase) looks like a good bet," he said.