The consensus now seems to be for a minimum of a 50 basis point hike, perhaps all in May, perhaps spread between May and June. If there is a difference of opinion out there, it is whether the total move will be 50 or 75 points, or more. There is nobody who expects the immediate direction of short rates to be anything but up. Let's step back from market analysis and ask whether serious inflation is really a threat. The bottom line is a question of trust.
Inflation is a sustained increase in the general price level and is always a monetary phenomenon.
If the supply of money grows faster than an economy needs to support real growth, that excess money will translate into inflation. It is an open question whether there is a real risk today or not. We have seen two significant spurts in the growth of the supply of money in the last two years. The first was in the second half of 1998 when Russia defaulted on its debt, Long Term Capital Management imploded, and the financial system was hit hard by a crisis of confidence and liquidity. The Fed did exactly the right thing in the short run and eliminated the liquidity concerns with a big injection of money.