Federal Reserve building seal
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We’re nearing the end of an eventful year for the Federal Reserve, one marked by a significant change in leadership and unprecedented scrutiny from the Oval Office.

Policymakers will meet one last time before the end of 2018. The decisions they make may have a lasting impact on everyone from consumers to skilled investors.

While the Fed is limited in terms of the actions it can take, there may be room for some surprises when it comes to its economic outlook and the guidance it provides. Here’s what to expect from the central bank when it meets Dec. 18-19 and what’s still up in the air.

What’s (almost) certain

A December rate hike

The Fed is widely expected to raise its benchmark interest rate next Wednesday. This would be the fourth rate hike of 2018 and the ninth one since the central bank started working to bring interest rates back from nearly zero three years ago.

The minutes from the last meeting held by the Fed’s rate-setting arm (the Federal Open Market Committee) indicated that another rate increase in the near future was a strong possibility. Investors are anticipating a December rate hike, too. At the moment, there’s a 72 percent chance that the Fed will raise interest rates by a quarter percentage point, according to the CME Group’s FedWatch tool.

“Most of the market believes that’s pretty much baked in, that that’s going to happen,” says George Rusnak, co-head of global fixed-income strategy for the Wells Fargo Investment Institute. “Honestly, I feel like if they pull back right now it actually might be a little bit more concerning than helpful to the markets.”

What’s certain

Fresh forecasts

In addition to deciding on an increase in the federal funds rate, the Fed will be providing an updated summary of projections for interest rates, economic growth and the labor market. It has new data to pull from, including the latest jobs report.

At its September meeting, policymakers indicated that they’re expecting to raise short-term rates one more time in 2018 and three times in 2019. Inflation is expected to remain around the Fed’s 2 percent target.

More comments from Powell

Another guarantee is the press conference that will follow the meeting next Wednesday. Normally, the Fed holds just four news conferences per year after its regular policy meetings. But over the summer, Fed chair Jerome Powell, who took the top post in March, said there will be a news conference every time the FOMC meets, starting in January, to improve communication and transparency.

Shrinking bond portfolio

Behind the scenes, the Fed is still unwinding its massive trillion-dollar balance sheet. This process began in October 2017. But the minutes from the November meeting noted that the Fed may need to make adjustments to make sure the Fed’s benchmark interest rate is in the range it’s supposed to be in.

What’s uncertain

Pace of future rate hikes

Recent comments from Fed chair Powell raised speculation that there could be fewer rate hikes in 2019 than initially projected. And Powell’s own statements from an interview with PBS and a speech he made the following month seemed to conflict.

“He said basically we have a long way to go and then of course with his speech at the Economic Club, he said that essentially the federal funds rate was just below the range of forecasts that we get with that summary of economic projections, and so those two statements don’t really fit well together,” says Mark Hamrick, Bankrate’s senior economic analyst.

The Fed intends to keep slowly pushing up rates, but what is unclear is when those rate hikes might occur. Since early 2017, the central bank has mostly stuck to a cadence of increasing its benchmark interest rate once per quarter.

Savers are still benefiting and can earn extra interest as banks continue to raise the yields tied to their CDs and savings accounts. As we prepare to enter 2019, analysts say we could be nearing the end of our rate-rising cycle. Still, borrowers with credit card debt and home equity lines of credit should be steadily chipping away at their balances because rates for these have been on the rise.

Defining what’s “neutral”

The neutral rate of interest is the point where the Fed’s benchmark interest rate is neither speeding up nor slowing down the economy. But even the Fed is finding it hard to define exactly where that “neutral” level is.

“A couple of participants noted that the federal funds rate might currently be near its neutral level and that further increases in the federal funds rate could unduly slow the expansion of economic activity and put downward pressure on inflation and inflation expectations,” the November meeting minutes stated.

We’ll get a better idea about where FOMC members view the definition of neutral with the release of an updated summary of economic projections, Hamrick says.

Addressing trade concerns

In its quarterly Beige Book released last week, most of the Federal Reserve districts noted that there were concerns about the tariffs imposed on Chinese goods and their impact on prices and industries including manufacturing. New York Federal Reserve Bank President John Williams said tariffs have had a “relatively small” impact on the economy but have had a negative effect on some business investments and confidence. Still, it’s unclear when and how the Fed might respond to worries about the U.S.-China trade war.

“They may mention something about market uncertainties and throw in there a trade reference, so wouldn’t be surprised to hear them increase the dialogue,” Rusnak says.

One more thing that is probably certain: Investors are in for a bumpy ride.

“There’s going to be probably more volatility over the course of 2019 as fiscal stimulus plays through a little bit, as monetary stimulus becomes less accommodative, there’s going to be more volatility,” Rusnak says. “So I think people just need to understand, what is their tolerance for this and keep a long-term view in mind.”