If you have been anxiously awaiting that long-expected interest rate hike by the Federal Reserve, this week is when you are likely to see it take place. Janet Yellen and the Federal Open Market Committee (FOMC) will start their December FOMC meeting on Tuesday (Dec. 13) in the morning hours, and it will end at roughly 2:00 p.m. on Wednesday (Dec. 14).

What investors, borrowers, economic watchers and consumers all need to be braced for is that Yellen and the voting members of the FOMC are overwhelmingly expected to hike the federal funds rate for the first time in a year.

The CME’s FedWatch tool currently has a 97.2% chance that the FOMC will raise fed funds to a new target range of 0.50% to 0.75%. After years of being at 0.00% to 0.25%, last December was the first rate hike, and it has been flat at a range of 0.25% to 0.50% ever since.

What seems to have mattered handily in the past six months was the economic reports were soft and the Federal Reserve just doesn’t like to be hiking or lowering interest rates right around presidential elections. Now we have seen a massive equity rally, and the Dow has reached new all-time highs and is within striking distance of 20,000. Interest rates have risen handily as well.

What is likely to be the real issue ahead is whether the latest market and economic action will have raised the FOMC members’ expectations for growth and inflation in 2017. They have been calling for gradual escalation on both, but the reflation trade and the efforts of Donald Trump to focus on pro-growth initiatives should have brought at least some upward revisions to those Fed economist outlook calls for 2017 and 2018.

What 24/7 Wall St. is more concerned with than this long-overdue hike is how fast interest rates will rise in 2017. The CME’s FedWatch Tool currently has only a 16% chance that fed funds will rise to even a range of 0.75% to 1.00% by the March 15, 2017, FOMC meeting — followed by just 25% for the same range by the May 3, 2017, FOMC meeting.

It is the June 14, 2017, FOMC meeting announcement where the odds rise to 44.3% for a 0.75% to 1.00% range go above the odds of fed funds staying flat from December’s (expected) 0.50% to 0.75% range.

While 24/7 Wall St. has been forecasting that the December rate hike should be in the bag, there is one thing that the market is not prepared for at all: No action at all! If the FOMC were to say that things still look too uncertain, the rationale between the inflation and growth crowd may have a completely different reaction, versus the crowd that is still worried about global economic stability. As a reminder, the December meeting will be followed by new annual forecasts ahead if there are changes.

As of Monday morning, the Dow Jones Industrial Average was at 19,777 (up from 18,332 on November 8), and the Dow could be heading for 22,000 in 2017 if a few things go right. The yield on the 10-year Treasury was last seen at 2.48% (compared with 1.86% on November 8). Gains of that magnitude just are not normal, and they are not indicative of a  market that would be scared about one measly quarter-point rate hike.

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