The Federal Reserve is expected to provide an update on its approach to high inflation today at 2 p.m. ET.

The central bank, which has held short-term interest rates at near zero since March 2020, is not anticipated to raise interest rates at the conclusion of Wednesday's meeting. Instead, Fed Chairman Jerome Powell will more likely tee up the first post-crisis interest rate increase for the next policy-setting meeting in March.

The reason: the Fed needs to end its pandemic-era policy of buying U.S. Treasuries and agency-mortgage backed securities in the open market, a process which should be finished by mid-March. The Fed balance sheet, where those asset purchases live, has ballooned to nearly $9 trillion.

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Still, market volatility and the overarching concerns about high inflation readings — unseen in almost 40 years — mean heightened attention to the Fed statement and the Powell press conference that will follow.

His commentary could solidify — or reposition — Fed watcher predictions for how many rate hikes to expect through the remainder of this year. Currently, Fed funds futures contracts appear to be pricing in the strongest likelihood of four total rate hikes (25 basis points each, for a total of 1.00%) by the end of 2022.

The statement from the policy-setting Federal Open Market Committee will be released at 2 p.m. ET followed by Chairman Powell's press conference at 2:30 p.m. ET.

Federal Reserve Board Chairman Jerome Powell speaks during his re-nominations hearing of the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill January 11, 2022, in Washington, DC. (Photo by Brendan Smialowski / POOL / AFP) (Photo by BRENDAN SMIALOWSKI/POOL/AFP via Getty Images)

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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