The Federal Reserve is set to announce its latest interest rate decision Wednesday as policymakers confront persistent inflation, elevated energy prices and rising borrowing costs across the U.S. economy.

The central bank’s two-day policy meeting concludes Wednesday, with its decision scheduled for 2 p.m. Eastern time. Federal Reserve Chair Kevin Warsh is expected to hold a news conference 30 minutes later.

Financial markets widely expect the Fed to raise its benchmark interest rate by a quarter of a percentage point, which would mark the central bank’s first rate increase since 2023. A move of that size would lift the federal funds target range to between 3.75% and 4%.

The decision comes as inflation remains above the Fed’s 2% target, with higher energy prices linked to the conflict involving Iran adding to price pressures.

Oil prices have remained above $100 a barrel, while rising government bond yields have increased borrowing costs throughout the economy. The yield on the benchmark 10-year U.S. Treasury has recently hovered near 5%, contributing to higher financing costs for consumers and businesses.

The combination of persistent inflation and signs of economic strain presents policymakers with a difficult balancing act. Raising interest rates can help restrain inflation by reducing demand, but higher rates can also make mortgages, credit cards and business loans more expensive and potentially weaken the labor market.

The Fed left interest rates unchanged at its previous policy meeting. However, policymakers have increasingly expressed concern about persistent price pressures, strengthening expectations that the central bank will resume monetary tightening.

Warsh, who became Fed chair earlier this year, has emphasized the central bank’s responsibility to restore price stability.

Beyond Wednesday’s rate decision, investors will closely examine the Fed’s updated economic projections and Warsh’s remarks for indications of how policymakers view inflation, economic growth and the possibility of additional rate increases in the months ahead.