The Federal Reserve’s plan to raise its benchmark rate to a neutral level, around 2.5%, by the end of the year is under pressure after surprisingly strong May consumer inflation data on Friday.

“The May CPI was a stunning blow to the Fed’s hopes that inflation would cool off any time soon,” said Stephen Stanley, chief economist at Amherst Pierpont.

Many economists believe that in the wake of the CPI data, Fed Chairman Jerome Powell and his colleagues will look for ways to send hawkish signals to convince the public and the markets that they are serious about curbing inflation.

The Fed will announce its policy decision and release updated economic forecasts and a “dot-plot” projection of the future path of interest rates at 2 p.m. Eastern time on Wednesday. Powell will explain it all at a news conference at the Fed’s Washington headquarters at 2:30 p.m. Eastern.

Here are three ways that economists say the Fed can send more hawkish signals:

The size of Wednesday’s rate hike

Over the past six weeks, Fed officials have coalesced around a plan to hike the central bank’s policy rate by a half-percentage point at both the Fed’s meeting this week and the next meeting at the end of July.

Despite the hot CPI reading, most economists thought this was the most likely outcome for Wednesday until the Wall Street Journal published an article Monday afternoon that said Fed officials will consider surprising the markets with a larger-than-expected 0.75-percentage-point interest-rate increase. Soon after the article was published, a spate of prominent economists, including Goldman Sachs and JPMorgan, revised their forecasts to include a 0.75-percentage-point hike on Wednesday. Other economists are sticking with the half-percentage-point hike.

A 75-basis-point hike would be the largest rate increase in nearly 30 years.

Economic forecasts send a signal the Fed intends to slow down growth, even if it raises the risk of recession

The Fed last published its economic projections, including its forecast for interest rates, in March. This forecast was “widely panned,” noted Richard Moody, chief economist at Regions Financial Corp., because the Fed projected “the softest of soft landings” — in other words, a rapid deceleration of inflation with no change in the unemployment rate.

In March, the Fed penciled in a midpoint of the federal funds rate at 1.875% at year’s end and ending 2023 at 2.75%, which was also the implied terminal rate.

his forecast will be different, economists said.

“We anticipate the FOMC will send an unambiguous signal that it intends to restrict the policy stance this year and next by a higher degree than it had anticipated at the March meeting. In effect, we look for the dot-plot medians to signal a tighter policy path for both this year and 2023, even if that may mean assuming a higher risk of recession,” said Oscar Munoz, macro strategist at TD Securities.

Whatever the eventual size of the June rate hike, the Fed will be close to 1.875% after the July meeting, so the question is how much higher the year-end 2022 median will be, and how high rates will go in 2023.

Economists at Deutsche Bank said the Fed’s economic projections should show a less-soft landing but stop short of a recession.

They expect the Fed to raise its forecast for the unemployment rate in 2023 and 2024 and trim its estimate for gross domestic product.

On the key question of inflation, Deutsche Bank predicted the Fed will forecast a 5.6% inflation rate, measured by the personal consumption expenditure index, followed by a 3% inflation forecast for the fourth quarter of 2023 and then a 2.3% rate in 2024.

Powell’s view on how much more tightening will be needed

In May, Powell said the Fed would not hesitate to bring rates above neutral, into restrictive territory. He is likely to double down on that commitment this week.

Powell “undoubtedly will sound even more hawkish at his press conference on Wednesday than he has any time this year,” said Ed Yardeni, president of Yardeni Research Inc.

“On the one hand, Powell is likely to contend that the Fed can’t increase the supplies of food and energy to bring prices down. In effect, he will concede that the one and only toolkit in the Fed’s toolbox for combating inflation is to raise interest rates to levels that depress demand for all goods and services even if that increases the risk of recession,” Yardeni said.

The yield on the 10-year Treasury note TMUBMUSD10Y, 3.431% hit its highest level since April 2011 on Monday.