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Mohamed A. El-Erian

What to Expect From the Fed This Week

Policy makers will hike rates by 25 basis points and signal a more aggressive path of increases.

Chair Jerome Powell.

Chair Jerome Powell.

Photographer: Erica Canepa/Bloomberg

The Federal Reserve meeting this week will be less noteworthy for what the central bank does than for what it says about the future path of rates. With the traditionally most dovish voices on the Open Market Committee now sounding notably more hawkish, policy makers are likely to try harder to nudge market expectations up to price a steeper path of rate hikes.

Moving in that direction would improve the relative attractiveness of Treasury bonds and the dollar, even as it would highlight the growing economic and policy divergence between the U.S. and other advanced countries. Both outcomes have consequences for investors in stocks and other asset classes.