The Fed is likely to raise interest rates by another 50 basis points next week and by the same amount in July, before slowing to 25 basis points in September. Interest rates are expected to be 2.6% at the end of 2022 and 3.1% in 2023. The current benchmark policy interest rate ranges from 0.75% to 1%.

Federal Reserve Chairman Powell has been careful not to reveal how high interest rates will be, making the bank's quarterly path forecast for interest rates a focus for investors. The Fed will issue a statement and its latest economic forecasts in the early hours of next Thursday.

Investors have not only priced the 50 basis point rate hike that Powell has repeatedly hinted at, but they also expect a similar increase in September and further increases in November and December. but economists expect the interest rate path set by the Fed to be less aggressive than the market expected.

Powell is trying to lead the economy to a "soft landing". Economists' forecasts are almost in line with the Fed's interest rate path forecasts, with the policy's interest rate target range peaking at 2.75 per cent in December, 3 per cent by the end of 2023 and 3.25 per cent during monetary tightening. Economist Anna Wang expects the interest rate path to become more hawkish, with the median interest rate of 3 per cent in 2023 lasting until 2024, below the current terminal rate of 3.5 per cent implied in the euro.

The Fed is also likely to raise its forecast for price increases due to the persistence of inflation: inflation is expected to grow by 4.9% in 2022, 2.8% in 2023 and 2.3% in 2024. The long-term target was 2%.

At the same time, the Fed forecasts that the unemployment rate in 2023 and 2024 will be higher than this year's forecast of 3.5%, compared with 3.6% in May.

Barclays economist Jonathan Millar said that the heat of interest rate hikes continues, the real estate sector shows weakness, and US GDP growth is expected to slow in 2023 and the unemployment rate will rise further next year.

The Fed plans to begin clearing maturing securities this month and is gradually shrinking its balance sheet with a growth target of $1.1 trillion. Economists expect the balance sheet to shrink to $8.4 trillion by the end of the year and $6.7 trillion by December 2024.

It is understood that the Fed will resort to the direct sale of mortgage-backed securities, which is consistent with their preference to hold only treasury bonds for a long time. The market has different views on the timing of the sale, and most of them think it will start next year.

Economists have different expectations for the outlook for the US economy, with 31 per cent believing that a recession will occur in the next two years, 21 per cent believing that there may be zero or negative growth over a period of time, and the rest hoping that the Fed will achieve a "soft landing".

Philip Marey, senior US strategist at Rabobank, said a "soft landing" for the US economy would be difficult to achieve because of the lag in the impact of higher interest rates.

Most economists expect the Fed to stop tightening altogether when inflation falls to around 2%. Another view is that interest rate hikes will stop when core inflation (excluding volatile food and energy) falls to around 2.6 per cent.