The February Consumer Price Index (CPI) report is due tomorrow, pushing stock market crash fears to a fever pitch. What do you have to know before tomorrows’ nail-biter inflation report?

Well, Tuesday’s CPI update represents the last major economic release before next week’s Federal Reserve rate hike decision. As such, it’s likely the last chance for markets to gauge whether a 50-basis-point hike is coming, something that Fed Chair Jerome Powell has hinted at in recent weeks.

Prices are expected to have fallen in February. Current projections have prices up 6% year over year, down from January’s 6.4% reading. Core CPI, which excludes the more volatile food and energy categories, is predicted to come in up 5.5% year over year, down a hair from 5.6% in January.

Inflation is at the heart of the Fed’s rate hikes. Indeed, the central bank has raised rates eight times since January 2022 in the hopes of lowering inflation. While prices have fallen quite a bit from the 9.1% June CPI reading, most attribute the change to President Joe Biden’s release of the Strategic Petroleum Reserve and the accompanying fall in gas prices, rather than a structural reduction in inflation.

With the markets still reeling from last week’s surprisingly strong jobs report and the recent implosion of SVB Financials’ (NASDAQ:SIVB) subsidiary Silicon Valley Bank, most analysts have already started pricing in a 25-basis-point rate hike. Tomorrow’s CPI could be the last economic indictor to change that.

Stock Market Crash Fears Climb Amid SVB Fallout

Evidence is brewing that the Fed may switch from 25 bps to 50 bps rather than transition away from its rate hikes. This week’s inflation data will likely confirm the Fed’s path, one way or another.

“Tuesday’s inflation data will be the make-or-break on whether the Fed will raise rates by a quarter-point or a half-point at their next meeting on March 22,” said Kevin Cummins, head U.S. economist at NatWest.

The CPI report will also likely have an outsized effect on equity markets. Indeed, in past months, even a 0.1% diversion from projections has pushed the markets into volatility.

Macroeconomic catalysts have been major market movers over the past year. Heading into one of the year’s most crucial rate hike decisions on March 22, any sign of what’s to come will likely push traders to the bullish or bearish margins.

“Tuesday’s CPI report will likely show that prices are resistant and sticky,” said Jose Torres, senior economist at Interactive Brokers. “The Fed still has a lot of work to do, not only in their rate hikes but also their tone to signal to the market that they won’t let up.”

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.