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 hike. According to economists cited in the report, the central bank has historically been reluctant to raise rates just once, suggesting the possibility of three increases ahead. That prospect matters because markets tend to price in policy paths gradually, and a shift from one hike to several can ripple across asset classes.

The stiffest test, economists suggest, may come where rate sensitivity is highest. Rising rates typically pressure long-duration assets—growth equities and bonds—by raising the discount rate applied to future cash flows. Sectors that rely on cheap borrowing, such as real estate and highly leveraged companies, also tend to feel the pinch first.

What to watch: the pace and language of Fed communication, incoming inflation and employment data, and how bond yields respond. Each of these signals helps clarify whether three hikes remain a projection or become the base case—and how smoothly markets absorb that adjustment.