Federal Reserve officials are widely expected to announce aninterest-rate increase this week amid buoyancy in the stock marketand indications the U.S. economy continues to grow steadily,without signaling they anticipate accelerating their pace of policytightening.

Beyond the expected announcement Wednesday of a quarter-pointhike in the U.S. central bank's benchmark rate target, to a rangeof 0.75% to 1%, investors will be looking for whether policy makerschange their forecasts for the rest of 2017 and beyond.

Fed Chairwoman Janet Yellen may offer additional clues during apress conference in Washington 30 minutes after the 2 p.m. releaseof a post-meeting statement and new projections. Here's what towatch for:

The so-called “ dot plot,” which displays individual rateforecasts of officials on the policy-setting Federal Open MarketCommittee, will probably continue to show three hikes this year asappropriate, according to the median estimate. It was last updatedin December and will cover projections out to 2019, plus anestimate for the longer run.

That would imply that a flurry of signals from policy makers inrecent weeks about the likelihood of tightening in March was moreabout a shift in the timing than in the number of increases theFOMC is likely to approve this year, according to Jonathan Wright,an economics professor at Johns Hopkins University.

“The data have been generally good over the last couple ofmonths, but not in a way that materially changes the outlook ongrowth or inflation,” said Wright, a former Fed economist.

Economic Outlook

The FOMC's statement will probably continue to acknowledgeongoing improvements in the outlook for the U.S. economy followinga string of better-than-expected economic data, including the LaborDepartment's latest report on the job market. That update,published March 10, showed 235,000 workers were added to payrollsin February, and the unemployment rate declined to 4.7%.

The report also showed large increases in headcount in theconstruction and manufacturing sectors, which parallel recentimprovements in measures of business investment. The FOMC willprobably acknowledge these trends by modifying a reference to“soft” business investment in the statement it published after itsJan. 31-Feb. 1 meeting, said Neil Dutta, head of U.S. economics atRenaissance Macro Research.

Still Gradualists

In her press conference, Yellen will probably face questions onwhether this week's rate increase marks a pivot toward a fasterpace of tightening.

“Yellen's job at the press conference will be to emphasize the'gradual' part” of their rate projections, said Roberto Perli, apartner at Cornerstone Macro and former Fed economist. As forexplaining tightening now rather than waiting until later in theyear, “it is better from their perspective to take the opportunitywhen they have it, when they are confident about the prospects forthe economy,” he said.

Minutes of the FOMC's Jan. 31-Feb. 1 meeting indicated thecommittee would begin discussing conditions that would warrant achange in management of the Fed's $4.5 trillion balance sheet atsubsequent meetings. Currently, the Fed rolls over maturingsecurities it owns and the FOMC has said it expects to continuedoing so until rate increases are well underway, on the premisethat maintaining the balance sheet's current size supports theeconomy by helping to keep longer-term borrowing costs lower.

Yellen will probably dodge questions during the press conferenceabout any potential changes to that strategy unless the committeehas already come up with “something concrete, which is unlikely,”Perli said.

Bloomberg News

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