Markets anticipate quarterpercentagepoint rate increase
Policy statement due at 2 p.m. EST 1900 GMT
Fed39;s Powell to hold news conference

WASHINGTON, Feb 1 Reuters The Federal Reserve is expected to raise its target interest rate by a quarter of a percentage point on Wednesday, setting aside the rapid hikes used last year to curb a surge in inflation in favor of a more stepwise hunt for a stopping point.

The expected increase would set the U.S. central bank39;s benchmark overnight interest rate in the 4.504.75 range, the highest since November 2007, when the economy was on the eve of what would prove to be a long and deep recession.

Policymakers hope to avoid that sort of outcome this time, and economic data since their last policy meeting in December generally has moved in the right direction Inflation is slowing under the impact of higher interest rates and tighter financial conditions, while the economy continues to grow and create jobs.

The ratesetting Federal Open Market Committee is due to release its policy statement at 2 p.m. EST 1900 GMT. Fed Chair Jerome Powell is scheduled to hold a news conference half an hour later to elaborate on the decision.

Recent events suggest that the coming year may be a notch less challenging than previously thought, Nathan Sheets, chief global economist at Citi, wrote this week, noting that recession risks were easing on a global basis while U.S. data pointed to continued growth, moderating inflation, and a slower pace of…