fed to use dot plot forecast to affirm commitment to getting inflation down the federal reserve is expected to use its monetary policy decisions on wednesday to send a message that the economic outlook remains strong enough to handle further interest rate hikes despite woes in the banking sector this marketaffirming message along with remarks stressing that the banking system is sound and the fed is ready to provide liquidity will be aimed at bolstering confidence readfed likely to hike interest rates this week so far so good but the fed also has to provide its forecast of the future path of interest rate hikes and these might be hard for the market to digest the risk isthe associated dot plot will be a little hawkish said vince reinhart chief economist at dreyfus and mellon thats because the feds forecast will likely show a stark difference from the markets views the feds so called dotplot will likely stick to its forecast endpoint of rates at 51 which implies one more rate hike in may but it could raise the endpoint to 5375 in either case the fed is not expected to forecast any rate cuts this year the market is barely pricing in a may hike but then the differences set in market pricing implies a rate cut as soon as june with rates falling to 42545 by year end economists dont think the market will be convinced it is highly doubtful that the these dots are going to reverse the tide of rate cut expectations that are currently prices into the frontend of the market but policymakers are going to use the dots to affirm getting inflation back down to 2 said aneta markowska economist at jefferies in a note to clients thats ok with the fed chair reinhart said powell will try to sweeten the bitter message of more rate hikes by not trying to convince the market that it is correct that passive strategy was also in evidence at powells last press conference in february reinhart said at that meeting powell was pressed on the feds views of higher rates for longer and replied in essence this is our forecast i dont quite get why you think were going to ease so fast reinhart said in the next six weeks the data came to him and the higher for longer rate strategy was priced in until the collapse of silicon valley bank earlier this month reinhart said it would hurt the economy if the market moved quickly to adopt powells views reinhart said if markets snapped to where the fed is that would be a big tightening move he said so powell will tell the market what he intends to do and will let time arbitrate who is right he said avery shenfeld chief economist at cibc capital markets said investors might not be pricing in strong odds of modest rate cuts this fall instead one can think of a world in which everyones base case is that the fed hikes one or two times and then stays on hold for a couple of quarters but that theres a nonnegligible probability that the economy goes into a tailspin and requires a major tumble in interest rates he said thats not unreasonable given the fog were operating in today but if the fog clears as we expect bond yields will head higher as the rate cut story gets pushed into 2024 shenfeld added read pros and cons of possible fed moves wednesday stocks were up sharply in late day trading on tuesday the yield on the 10year treasury note rose to 36 the 2year treasury note jumped by the most in a decade amid easing angst over banks this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal