Almost everyone was expecting the Federal Reserve to raise interest rates this month. What is less clear is how high those rates will go. Either way, investors shouldn't let that keep them up at night.

When the Fed raised interest rates for the first time in three years, from 3.75% to 4%, at the conclusion of the Federal Open Market Committee meeting last week, the move seemed a foregone conclusion. After all, the job market has been relatively stable, while the ongoing Iran war is just the latest fuel for the inflation fire. In that scenario, it's obvious which aspect of the central bank's dual mandate-maximum employment and price stability-takes precedence.

"A booming nominal economy, i.e. resilient real growth despite rising inflation, gave the Fed the green light to raise rates," Bank of America U.S. Economist Aditya Bhave writes. "If the Fed doesn't tighten in this scenario, it runs the risk that as the supply shocks fade, demand-driven inflation might take over."

Fair enough. And while the S&P 500 and Nasdaq Composite did end lower immediately after the rate decision, it was hardly a bloodbath, and the indexes have since recovered.

Still, investors might, rightfully, wonder what the Fed will do when the decision isn't so clear-cut, and how aggressive policymakers could be from here.

"The key question for investors is whether the new tightening cycle will amount to an extended campaign to rein in an overheating economy or a mild tweak to temporarily recalibrate the monetary policy backdrop," writes BCA Research Head of Essentials Doug Peta. In other words, are there just two or three quarter-percentage-point rate increases ahead, or a more extended campaign of four or more?

Peta leans toward the former. He points to cooling housing costs and the likelihood that wages won't spiral upward.

Housing accounts for more than a third of the consumer price index and almost 45% of the core CPI reading, which excludes volatile food and energy costs. Shelter also represents many Americans' biggest expense. Therefore, any relief on this front would make a big difference.

Shelter inflation is still elevated on an annual basis, but for nearly a year has been below its 2019 average of 3.4%, meaning it has likely normalized after the pandemic-era surge. Housing prices could come down further as more supply becomes available.

Another factor in the Fed's favor in its inflation fight is wage growth. Peta says don't expect much of it; workers likely won't gain the upper hand soon in this "low hire, low fire" economy. There might be plenty of job postings online, but that likely reflects how easy they are to post. In reality hiring rates remain depressed, reflecting subdued demand. Most workers don't have collective bargaining power to force wages higher, either.

"The organized labor movement in the United States is an empty husk and the 1970s dynamic of wages and prices chasing one another higher is no more relevant than mood rings, pet rocks or my middle-class family's late, unlamented AMC Gremlin," he writes.

Perhaps the most important question is whether investors really need to be that worried about the rate increases overall. Glenmede Chief of Investment Strategy & Research Jason Pride says, not really.

"Markets often assume tighter monetary policy is inherently bad for risk assets, but history offers a more nuanced picture," Pride writes. "Following the first hike of prior tightening cycles, both stocks and bonds have historically produced constructive returns on average, even as borrowing costs moved higher. The path of inflation has typically mattered more than the fact that the Fed was tightening."

All the more reason for the Fed to keep their eyes on the inflation prize.