NEW YORK (CNN/Money) - There's not much anxiety about what the Federal Reserve is going to do on Tuesday.

A rate hike is a given, according to most market observers, even though December rate hikes are not all that common. In fact, the Chicago Board of Trade's fed funds futures contract shows traders are betting in at least a 98 percent chance of a rate increase.

Given the lack of suspense, investors will be watching the statement by Fed policy-makers for clues about what the central bank will do at its next meeting in February -- and beyond.

Jeffrey Saut, chief market strategist with Raymond James Financial, said last week's sluggish November jobs report shows the economy is not nearly as strong as some had thought, meaning the Fed will raise its target for the fed funds rate, an overnight bank lending rate, to 2.25 percent from 2 percent on Tuesday.

That would be the Fed's fifth quarter-point increase this year.

"The employment number that came out last Friday is consistent with a muddling economy. It's a fait accompli that the Fed will go up just a quarter point," said Saut.

And while many economists say the Fed will keep raising rates next year, the big question for investors is whether the central bank will get more aggressive or exercise moderation?

A lot depends on what happens to the dollar -- and the price of oil.

"The big question for 2005 is the magnitude of rate hikes," said Stephen Rigo, a senior analyst with Puglisi & Co., a New York brokerage firm.

In particular, the market will be curious to see if the Fed reaffirms that it will take a "measured" approach to raising rates -- which investors have taken to mean increases of no more than a quarter-point at any given meeting.

And with Friday's PPI report showing inflation is still fairly tame, the hope on Wall Street is that the Fed won't seek to cool the economy too much. The "core" producer price index, which excludes food and energy costs, rose 0.2 percent in November, in line with forecasts and just below October's 0.3 percent increase.

Margo Cook, head of the institutional fixed-income division at BNY Asset Management, said the PPI report, combined with November's less-than-stellar employment report, should lead the Fed to keep the "measured" language in its policy statement.

Many on Wall Street expect the Fed to boost the fed funds rate to 2.25% on Tuesday.

"At the end of the day, there aren't a lot of concerns about inflation," Cook said. "If the employment number was stronger, the Fed would change the statement to reflect better growth but the November jobs report should keep the Fed on the same pace."

Still, Saut thinks investors should look more closely at economic data and less at the Fed's statements, which are often full of econobabble.

"I don't pay much attention to what the Fed says because I don't know what they mean when they say it. It's like Nostradamus. These folks talk in quatrains. It's kind of comical as everyone tries to dissect this stuff," Saut said.

Regardless of what the Fed says, several analysts expect the central bank to keep a "measured" stance since there is little evidence the economy is in danger of overheating.

"One thing I would say is that we are past the peak growth portion of the recovery here. The Fed will have to raise rates to quell inflation fears but they will have to move cautiously," said Rigo, noting that corporate earnings growth is expected to slow next year after a strong 2003 and 2004.

And Saut sees the U.S. economy, as measured by gross domestic product (GDP), growing at about a 3 to 4 percent rate next year, an environment he calls good but not great.

With that in mind, Saut thinks that several more quarter-point moves during the Fed's eight scheduled meetings in 2005 are likely. He added that the fed funds rate is unlikely to be higher than 3.5 percent by the end of next year, which would still be relatively low.

The big wild card is the recent weakness of the dollar. If the Fed comments on the greenback in its statement Tuesday, that could signal that Greenspan & Co. are worried about currency.

After all, prolonged weakness in the dollar could fuel a pickup in inflation -- especially if oil prices start rising again -- which could cause the Fed to abandon its "measured" stance.

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In fact, some analysts say the Fed might seek to boost the dollar, and combat inflation, by raising rates at a more rapid clip than the market is currently expecting.

"Already the Federal Reserve is indicating an increased degree of inflationary concern and this would only be exacerbated by further depreciation [of the dollar]," Louise Purtle, analyst at fixed-income research firm CreditSights, wrote in a report Friday. "That raises the potential for rates in 2005 to be higher than might otherwise be considered optimal."

But BNY's Cook thinks the Fed is unlikely to concern itself with the state of the dollar.

"I don't think the Fed will act to defend the dollar since typically that's the Treasury's job," Cook said, "Greenspan has said that defending the currency is lower on his reasons to take action."