The Federal Reserve meets today and there should be few surprises as the central bank is widely expected to remove the last obstacle to a rate hike later this year.
Fed Chair Janet Yellen will hold a briefing at 2:30 p.m. EDT and will be releasing economic forecasts as well as an announcement that the Fed will be dropping the word "patience" from its statement, a sign that it could start raising rates as early as June.
The meeting will last two days with the bulk of the news to be released on Wednesday. This will include a six-paragraph policy statement, revamped economic forecasts, and the so-called “dot plot” path of interest rates from each of the 17 central bankers.
While markets will be keying on a single word, whether the U.S. central bank drops its pledge to be “patient” in raising short-term interest rates, the Fed is expected to send other messages about the strength of the economy and outlook for inflation.
Last January, the Fed had stated that economic activity in the U.S. was advancing at a “solid pace.” The central bankers also said inflation was being pushed lower by transitory factors that would likely dissipate.
The updated forecast will include latest “central tendency” estimates for the unemployment rate, inflation and gross domestic product, which excludes the three highest and three lowest projections. In the latest forecast, released in December, the Fed forecast growth in a range of 2.6%-3.0% this year and next. The unemployment rate was expected to fall to 5.2%-5.3% in 2015 and then only inch lower in 2016 to a range between 5.2%-5.2percent.
Some details of the forecast will also be closely watched. The Fed will release its updated estimate for the longer-run unemployment rate, which is what some Fed officials see as the lowest level the jobless rate can go without generating accelerating inflation. That estimate was 5.2%-5.5% in December. The jobless rate in February reached the high end of that estimate.