When is the next Fed meeting? Here's what to know and when to expect (another) rate hike.

At March's meeting, the Federal Reserve raised the interest rate by a quarter percentage point, pushing the current interest rate range to 4.75 to 5%.

Fed officials have indicated another increase could be coming, but a pause may occur as they assess the effects of the rapid increases on the economy and prices of consumer goods.

The latest Fed meeting is set for Tuesday and Wednesday. Here is what you need to know about when it is, why the Fed raises interest rates and what it means for inflation:

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Next Federal Reserve meeting

The next Federal Reserve meeting is scheduled for Tuesday, May 2 to Wednesday, May 3, 2023.

The Fed's last meeting was from March 21 to 22, when it raised the interest rate by a quarter percentage point, despite financial turmoil following Silicon Valley Bank’s collapse.

"You can think of (the crisis) as being the equivalent of a rate hike and perhaps more than that," Fed Chair Jerome Powell said at a news conference.

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Why does the Fed raise interest rates?

The Fed is the nation's central bank, leaving it in charge of monetary policy. This means the Fed sets interest rates and controls the money supply.

Its dual mandate is to promote “maximum employment and stable prices in the U.S. economy.” Stable prices means the Fed tries to keep inflation in check, with its long-term annual target at 2%.

In order to control inflation, one of the Fed's main tools is the federal funds rate, which is the rate banks charge each other for overnight loans. If that rate rises, banks generally pass on their additional cost.

Even though the Fed does not directly control all interest rates in the country, when it raises the fed funds rate, other interest rates eventually follow, including adjustable-rate mortgages, credit cards, home equity lines of credit, and other loans.

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What is inflation?

Inflation is a generalized rise in prices, affecting different goods and services throughout the economy, such as gas, rent and food.

It can be caused by several factors, such as more people spending money on goods or services that are not readily available to meet that demand. That allows producers and service providers to raise prices without worrying about a significant loss in sales.

Inflation also could be caused by a shortage of supply. If there's not enough goods to meet the demand for a good or service, this could lead to an increase in a manufacturer's or retailer's wholesale costs, which, in turn, would be passed along to consumers through higher retail prices.

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How many times has the Fed raised interest rates since 2022?

The Fed raised interest rates eight times last year. The pandemic’s shutdown of the economy had kept rates near zero prior to the Fed increasing rates by 0.25 percentage point in March 2022. That was the first hike in more than three years.

The second increase came in May, this time by 0.50 percentage points, followed by 0.75 percentage point bumps in June, July, September and November, pushing the Fed's key rate to a range of 3.75% to 4.00%.

In December, an increase of half a point came, making the range 4.25% to 4.5%. In January, it increased by quarter percentage point with the range at 4.5% to 4.75%.

The latest increase came in March, bringing the current interest rate range to 4.75 to 5%.

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Is inflation expected to go down?

There has been some indication that inflation is easing.

The consumer price index, which is most widely followed inflation gauge, showed overall prices in December were up 6.5% from a year earlier, down from a four-decade high of 9.1% in June.

However, the economy is losing some steam. Job growth has fallen to average monthly pace of 247,000 the past three months from 366,000 the previous quarter. And retail sales and business investment fell late last year.

Even without big Fed rate increases, economists have expected inflation to slow as supply-chain bottlenecks ease, commodity prices fall, a strong dollar lowers import costs and retailers offer discounts to unload swollen inventories.

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How high will the Fed raise interest rates?

The Fed now expects the rate to end 2023 at a range of 5% to 5.25%, higher than the 4.5% to 4.75% it projected in September, according to policymakers’ median forecast. It estimates it will cut the rate to 4.1% by the end of 2024 to support an economy likely to be weakened by the rate increases, above the 3.9% it predicted in September.

Contributing: Paul Davidson, Elisabeth Buchwald

This article originally appeared on USA TODAY: Next Federal Reserve meeting and rate hike decision are this week