Fed is expected to stay 'patient' and project fewer interest rate hikes

Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting January 30, 2019 in Washington, DC. The Fed has decided to leave interest rates unchanged.The Federal Reserve is expected to end its latest policy meeting Wednesday by refining its new overarching message that it plans to be"patient" about any further interest rate hikes.

Besides issuing a new policy statement Wednesday, the Fed will provide an updated economic outlook and Chairman Jerome Powell will hold a news conference. The central bank's new theme of patience and flexibility reflects its calming response since the start of the year to slow economic growth at home and abroad, a nervous stock market and persistently mild inflation. The Fed executed an abrupt pivot when it met in January by signaling that it no longer expected to raise rates anytime soon.

There is also anticipation that the Fed will specify when this year it expects to stop shrinking its huge portfolio of bonds, part of its balance sheet. Doing so would help keep a lid on loan rates. President Donald Trump, injecting himself not for the first time into the Fed's ostensibly independent deliberations, made clear he wasn't happy, calling the December rate hike wrong-headed. Reports emerged that Trump was even contemplating trying to fire Powell, who had been his hand-picked choice to lead the Fed.

Economists expect the Fed's updated forecasts to downgrade its estimate of growth in light of a slowdown in manufacturing and retail, sluggish housing and construction activity and global pressures, including an ongoing trade war.

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