The Fed could raise interest rates three times. Here’s where the market could face the stiffest test.

The Federal Reserve may not stop at a single rate increase, according to economists who note that the central bank has historically preferred to move in cycles rather than one-off adjustments. That pattern raises the possibility of three hikes ahead, a prospect that carries meaningful weight for markets still adjusting to tighter policy.

For investors, the key question is not whether rates rise, but how quickly and how far. Each additional increase compounds borrowing costs across mortgages, corporate debt, and consumer credit, which can pressure equity valuations and slow spending. Markets have already priced in some tightening, so the stiffest test may come if the Fed signals a faster pace than expected, or if economic data fail to support the hikes.

What to watch: upcoming inflation readings, labor market strength, and Fed communications for clues on the trajectory. Historically, rate cycles have mattered less for long-term outcomes than the pace of change and whether the economy can absorb it without stalling.